You probably already know you should check your credit reports at least once a year to catch errors or fraud. And if you’re applying for a major loan soon, you should check your credit report to gauge whether you’ll be approved. Another important time to review your credit report: before going job hunting.
Many employers check candidates’ credit history before extending a job offer. Unfortunately, if it comes down to you with bad credit, and a candidate with better credit, you may not get the job.
Eleven states currently have legislation that limit how employers can use credit history for job applicants: California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington. Depending on the law in these states, employers may be limited on how they can use credit history and prospective employees may be able to sue companies who violate the law.
What Are Employers Looking For?
Note that prospective employers check your credit report not your credit score. This fact is misstated over and over in media as many journalists don’t completely understand the distinction between credit reports and credit scores.
Where employers are allowed to check credit history, they aren’t necessarily looking to see if you have bad credit, but rather how you handle credit in general. They’re looking to see whether you’ve handled your accounts well, if you have major delinquencies or public records, or if you have a lot of debt. By law, employers must get your written permission before they can pull your credit report.
Having your credit in the best shape possible improves the chances of you getting the job you want. Don’t assume your credit report is fine simply because you’ve always paid your bills on time. It’s better to check before you go job hunting since your credit report could contain errors or other negative information you weren’t aware of. Checking your credit report ahead of time gives you a chance to clear up errors before you go job hunting.
How to Order a Free Credit Report Before Job Hunting
Federal law gives you the right to a free credit report if you’re currently unemployed and planning to look for a job within the next 60 days. You can get this free credit report in addition to the annual credit report that every consumer has access to through AnnualCreditReport.com and any free credit reports granted through your state’s laws.
The free job searching credit report has to be ordered directly and separately through the credit bureaus. They each have specific links for ordering this report and others granted directly through the FCRA (for instance if you’re receiving welfare).
Note that if you’re currently employed, this free credit report doesn’t apply to you. You should still check your credit reports before job hunting. There are several other ways to access your credit report for free. To purchase your credit reports, go directly to the credit bureaus or myFICO.com. The cost will be around $40 for all three of your credit reports.
Watch Out for Job Search Credit Report Scams
Watch out for scams associated with job searching credit reports. Some scams send you through unofficial links so a person can receive an affiliate bonus. You should especially be on guard for fake web pages set up to steal personal information and steal your identity.
For example, in response to an online job application, the “employer” may ask you to click a link or go to a specific website to order your credit report. They’ll claim it’s free. One sign that’s a scam: you have to enter a credit card number. Also, if you haven’t interviewed or met the employer in person, it’s likely a scam. Finally, if the email requests you to send back your credit score, you’re being scammed. Legitimate employers review your credit report and pull the report themselves only after getting your signed authorization.