Why Do I Need a Credit Check For a Job
Why Do I Need a Credit Check For a Job
This is a question not everyone asks themselves as many jobs and employers do not do credit checks as a part of the hiring process; however there are some jobs, professions, and employers that do credit checks on potential employees.
These credit checks are a part of the hiring process, and a low credit score or bad credit, could put you at the back of the queue for a job, or worse yet, see you not be in the running at all.
Among the many questions one may ask themselves is:
* Why do employers do credit checks?
* What professions have to do credit checks?
* Can I be denied a job due to bad credit?
* Is having a low credit score going to keep me out of a job?
* What is a good credit score to have for a job?
One thing to note is that a potential employer does as a course of their hiring process require a credit check, they must have your permission. So you are going to know if they require to view your credit file or not.
This permission or request/release, may be a part of the job application you sign when applying, so you need to look over the application carefully, and read all potions of the application.
This is not to say having a perspective employer review your credit history is a bad thing, it is just making you aware.
One other question that gets raised is “when an employer reviews my credit file, does it affect my credit score?”.
The quick answer to this question is no, an employer looking at your credit history does create an inquiry or footprint, but it is a “soft inquiry”, and does not affect your credit score. These soft inquiries are also not visible to others who may view your credit file, which means, a potential employer cannot see if other potential employers have also viewed your credit file.
Credit scores are made up of the following factors and what percentage this factor makes up your credit score:
* Payment history 35%
* Account balances 30%
* Age of your credit 15%
* Types of credit 10%
* New credit 10%
New credit represents each time you apply for credit or an inquiry or footprint is made on your credit file. Too many of these can reduce your credit score.
Employers looking at your credit file, do not reduce your credit score.
Why Do Employers Do Credit Checks?
An employer may conduct credit checks on employees and potential employees for a variety of reasons.
The job in question may be one that requires you to handle money/cash, or you may provide some form of financial service.
Some jobs require security clearances, so as a part of the hiring process and obtaining some security clearances, a credit check is performed.
One question that is asked or simply stated is that one’s credit history is not a reliable indicator of how one may perform at work, or show one’s work ethic and ability.
This may seem true, however some employers will look at someone with a poor or bad credit history as someone who may not be organised, reliable, doesn’t live up to agreements, and a possible risk for theft or fraud.
While studies have been done on just this very idea, and some have shown bad credit may equal a bad employee, there are also studies that refute this.
What Professions May Require Credit Checks?
It is up to each individual employer if they choose to make credit check a part of their hiring process, and there are many that do not.
You would not expect workers in the construction business or other similar positions to be expected to have their credit files viewed.
If a job requires an employee to handle cash, then an employer may require a credit check.
Some jobs, such as in the legal profession, or banking and finance, may be required to carry out credit checks on employees. And for some security clearances credit checks are required, and may be repeated on a regular basis to maintain that security clearance.
Can I Be Denied a Job Due to Bad Credit?
The answer to this question is unfortunately yes, you could be turned down for a job due to poor credit and a bad credit history.
Why you may ask…that is an employers decision to make.
If an employer has two (2) viable candidates for a job, and one has good credit and one has bad credit, they may choose the candidate that has good credit, passing over the candidate with poor or bad credit.
Is it fair?
Maybe not, but they are the ones doing the hiring and they can dictate the hiring process and whom to hire as long as they are not discriminating and following the employment laws.
What is a Good Credit Score to Have For a Job and Will a Low Credit Score Exclude Me?
This is a bit of a trick question, and also slightly misleading as credit checks for employment as stated are soft inquiries, so the employer does not see your full and complete credit file, and they also do not see your credit score.
What an employer may see is the pubic records section, which can show CCJ’s and bankruptcies, and also if you are on the Electoral Roll, and your various accounts.
So if you have a low credit score due to the fact you may not have many credit accounts or be credit active, it will not affect what a potential employer may see, and hopefully does not influence or factor into your being hired.
So for some jobs there can be credit checks done as a part of the hiring process, and as we move to a more Social Scoring system, we may see this being used more and more.