In addition to background checks, employers are increasingly requesting and evaluating prospective employees' credit reports. This practice is legal and is governed by the Fair Credit Reporting Act and enforced by the Federal Trade Commission (FTC). Employers use your credit report to obtain specific information that may affect their decision to hire you.

Payment History

This is the most important information that employers will have access to upon pulling your credit report. They can see how much debt you carry, how many creditors you have, and if you have a history of making timely payments to your creditors. They use this information to judge how responsible you may be as an employee. Every employer has a different threshold for what they deem acceptable credit and proof of one's "personal responsibility."

Employment History

Employment history included on your credit report is used by employers to verify that what you have listed on your resume/application is accurate. This is a good reminder that honesty is always the best policy for job seekers when providing details on your resume.

Address History

Addresses provided on a credit report are used by employers to verify that what you have provided them is accurate. Employers may frown upon a history that indicates frequent moves, as they often want to hire employees who appear to be stable and reliable.

Continued Use

Your employer may continue to check your credit report after you are hired. The Fair Credit Reporting Agency allows employment checks for purposes such as promotion or transfer.

Considerations

An employer must obtain your permission to view your credit report and they must show you your report if it results in a rejection of your hiring. Once you have given your permission for a credit check, the employer generally does not have to ask again. Some states have acknowledged the potential for unfairness in this practice and have passed laws that require a direct correlation with the specific job before a credit check is allowed. Check with the attorney general's office in your state for specifics. Order your own copy of your credit report so you know what employers may be reading about you. You are entitled to a free personal credit report once very 12 months. Visit the FTC's site (www.ftc.gov/opa/2004/06/freeannual.htm) for more details. Reports may be ordered though freecreditreport.com.

Source:

Federal Trade Commission

Resource:

Free Credit Report Information