How Employers Use Your Credit Score

You’ve probably have heard about the importance of maintaining a good credit score as it may affect your ability to borrow money and the rates you may pay for that credit score. But how do they relate to your ability to get a job? It is true that employers may study information about your past credit history, and many do. However, they are prohibited by federal law from checking your actual credit score.   This is an important and often misunderstood distinction.

The information available to potential employers is sometimes referred to as an “employment credit report” and includes public record information such as bankruptcies, foreclosures, and liens. The format may vary slightly depending on credit reporting bureau. These reports contain: the source (e.g. store or loan name) and type (e.g. revolving credit or installment loan) of any credit accounts, account histories and any reported late payments. However, they do not have specific account numbers, your age, date of birth or actual three-digit credit scores.

The Fair Credit Reporting Act (FCRA) provides important consumer protections in terms of these employment-related inquiries. According to the Federal Trade Commission website, employers must take certain actions before accessing or utilizing a candidate’s credit report. This includes:

  • Informing the job applicant that their consumer report may be used in decisions related to their employment. This notification must be in writing and in a stand-alone format.
  • Getting written permission from the applicant (or employee) to obtain the credit report.
  • Certifying to the credit reporting company that they have notified and gotten permission from the applicant, complied with the Fair Credit Reporting Act requirements, and will not discriminate against the applicant.

Additionally, if a company doesn’t hire you because of information contained in your report, it must provide you with a copy of it so you can review it for possible incorrect information. Employers also are advised to review applicable state laws that may also restrict the use of consumer reports.

Another important thing to know is that inquiries made to a credit reporting agency for employment purposes do not affect your creditworthiness or credit risk scores. These are referred to as “soft inquiries” which do not affect your credit score. They also are not shown to lenders.

It is important for you to keep on top of your credit, so be sure to review your credit report each year to make sure everything that has been reported is accurate. You can obtain a free copy from each of the three major credit reporting bureaus (Equifax, Experian and TransUnion) by visiting

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