Why Employers Check Your Credit History for Jobs

Business person climb better credit score

You may think it enough that your resume contains experience relevant to the job and that your educational background is excellent. You’ve also aced the interview. However, your job application may have also authorized a credit check by your potential employers. They use this report to find any of the following problems, which may reflect on your ability to do the job properly.

  • Bankruptcy or Foreclosure. These are serious events not only for your personal life but also for employers. They may show that you have poor decision-making skills, cannot manage a complex technical project for the long term, or that you cannot mitigate problems in the beginning to avoid catastrophic failures.
  • Late fees. Numerous late fees for 30, 60 or 90 days may show that you have trouble budgeting. You may not able to track your obligations and meet schedules in a timely matter. This is particularly a problem for jobs involving finance.
  • Too much credit card activity. Applying for several charge cards can show that you’re desperate and cannot live within your means. If several companies close your card accounts, it indicates that you don’t know how to handle money and use cards not to manage money but to live outside what you can afford.

You can only discover these issues if you know what’s in your credit report. You can order one free copy per year from each of the credit bureaus: TransUnion, Equifax, and Experian. Use AnnualCreditReport.com to get this information. If you discover mistakes in your report, contact the relevant merchant and bureau to get it corrected. There’s not much you can do about problems that are accurately reported, other than have a logical explanation when the employer asks you about them.

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