Credit is an unavoidable part of our lives and keeping tabs on your credit background is critical. More and more employers are pulling applicants' credit reports as a part of the hiring process, military personnel are susceptible to loosing their security clearance with bad credit, and lenders use credit to determine your interest rate. Ensuring that your finances are in order is important for your career as well as your financial well being.
What is credit?
Credit is your "financial trustworthiness”, which is calculated by using your credit-related payment history as the foundation. This comes from the information lenders report to the credit bureaus on how you pay your credit bills; a couple of examples include: are you late or on time with your payments and how much do you owe in terms of credit.
Why would an employer check my credit?
Many banks, credit unions, mortgages brokers, accounting firms, government agencies, and other jobs dealing with the handling of money are very interested in your credit history because of the potential for funds to be stolen or embezzled. Other reasons could be that the employer might be checking to see if the credit history supports the information on the resume.
How does the employer obtain a copy of my credit report?
During the hiring process, you will find a page that allows the company to pull your credit report once you sign it.
What if I have some negative information on my report?
Know what is on your credit report by visiting www.annualcreditreport.com; this is the legitimate website to view your reports at no charge. You will be able to access all of your reports from the three bureaus. Be proactive, if you do have some negative history it’s best for you to bring address the issue in person and explain the circumstances. Now when the employer views your report, they will remember your explanations and make decisions accordingly.
What if I find incorrect information reported on my credit history?
Consumers can dispute wrong or fraudulent information found on their credit reports either online while logged in at one of the credit bureaus’ sites or by writing in. You will need to explain what is wrong and what you would like to see happen. An example is with fathers and sons with the same name ("Jr” and "Sr”), where credit history may be reported for the wrong person. A dispute would be, "This account does not belong to me; please remove it from my credit history”. Disputes can be filed for wrong payment history, wrong credit limit, whether an account is closed or still open, or that an account has been paid off.
How Neighbors can help:
Check out the events section on our website at www.neighborsfcu.org to find and register for upcoming workshops. Also, follow us on Twitter (@NeighborsFCU) and Facebook (www.facebook.com/NeighborsFCU) for updates on financial literacy topics and other credit union activities.
Did you Know?
The 2010 Society for Human Resource Management report, "Background Checking: The Implications of Credit Background Checks on Hiring Decisions," found that while almost six in 10 organizations pull credit reports on at least some candidates, only 13 percent check them all.