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.

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<strong>What is Our Criteria For Applying?</strong> 
Every lender on our website has their own specific criteria by the basics are mentioned below and you must have a guarantor to be eligible. Simply select the lender of your choice and you will be taken directly to their website where you can apply. You will be required to submit your details including:<li style=”text-align: center;” data-mce-style=”text-align: center;”>Name (must be over 18 as the borrow, 21 or 25 as the guarantor)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Residence (your chances will improve if your guarantor is a homeowner)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Employment status (must be employed or on a pension)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Income (earning at least £600 per month and able to make repayments)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Monthly expenses (not have too many loans open or in major debt)</li>
You will then be asked to include the details of your guarantor and as mentioned above, this is usually someone who you know and trust and wants to help you with your personal finances. Ideally, a guarantor with good credit will maximise your chances of being approved based on the idea of ‘if someone with good credit trusts you, well we can too.'<strong>How Much Can I Borrow From Guarantor Loans?</strong>Guarantor Loans gives applicants the chance to borrow £500 to £15,000 depending on the lender. Some lenders we feature like Buddy Loans only have a maximum loan value of £7,500 and TFS Loans is the only lender that stretches up to £15,000.Factors that can influence the amount you can borrow revolve around having a good guarantor. One that is a homeowner, with solid employment, income and good credit rating will maximise your chances of borrowing the largest drawdown possible.The lenders featured on Guarantor Loans see a homeowner as someone who has already gone through the rigorous process of credit checking and affordability and if they can afford a house, they should be able to act as a guarantor for you.By comparison, having a guarantor that is not a homeowner offers slightly less security and means that amount you can borrow is slightly less too.Higher amounts may be available to those who already have a better than average credit rating, are homeowners themselves and a repeat customer with the lender who has already paid their loan on time. To apply directly with your lender of choice see <a href=”” data-mce-href=””>direct lenders</a>.<strong>What Does The Guarantor Have To Do?</strong>Upon completing an application, the lender will typically send you a <a href=”” data-mce-href=””>pre-contract loan agreement</a> and SECCI (Standard European Consumer Credit Information form) which will highlight the terms of your loan. You and your guarantor will be required to review the terms of the loan, including the loan drawdown, fees, repayment dates and responsibilities – and this can be signed via an online verification process using your email and mobile phone.The lender will usually carry out an individual phone call with you and your guarantor to ensure that you both understand the responsibilities and what is required of you – notably that if you cannot make repayment, your guarantor will be required to pay on your behalf. Further to some additional credit and affordability checks, funds can typically be transferred within 24 to 48 hours (or sometimes on the same day).<strong>Are Guarantor Loans Available For Bad Credit Customers?</strong>Yes, even if you have a history of adverse credit, <a href=”” data-mce-href=””>CCJs</a>, bankruptcy or IVAs several years ago, you can still be eligible. The idea is that you are using your guarantor and their financial history to ‘back you up’ and give your loan extra security. However, it is noted that your guarantor should have a good credit score and consent to co-signing your loan agreement.<strong>How Soon Can I Receive Funds?</strong>Guarantor Loans works with lenders that can facilitate funds within 24 to 48 hours of approval, or sometimes on the same day.When your funds are successfully transferred, most lenders working with Guarantor Loans will send the full amount to the guarantor’s debit account first. This is a standard security measure carried out by lenders to ensure that the funds are going to the right person and confirms the involvement of the guarantor. The guarantor usually has a ‘two week cooling off period’ where they can decide to pass on the money to the main borrower or they can change their mind and return the funds with no extra charges.