Is Your Employer Seeing Your Credit Report?

 An employer (or potential employer for that matter) must obtain written permission from you in order to access your credit report.  If it does occur, chances are there was a form that was included in your employment application it was a part of his employment application or the terms of his employment. You should be aware that many employers now consider this a standard practice.

So the next logical question is “Why is an employee's credit of interest to a potential employer?”  In the case of prospective employers, how you handle your finances may reflect how you handle other aspects of your life. Always being late paying your bills might indicate a penchant for being late for work. A bankruptcy or other public record may indicate a lack of sound judgment or the possibility of work-distracting financial problems.

For a current employer, it might make a difference if two candidates were up for a promotion and there was only one opening. This is all part of the trend to use credit history outside of traditional lending.  Insurers and employers have found that credit behavior does not exist in a vacuum and can be predictive of future behavior in other areas. I even know some love-smitten couples who would not say

So, you can see the consequences of bad credit are becoming more far-reaching every day. Recently, some troops were denied deployment due to bad credit, and many can't get a job-required security clearance because they can't seem to manage to pay their bills when they are due.

Of course, this is in addition to the usual pain and suffering caused by high interest rates, excessive fees and the unpleasantness of having to deal with progressively hungrier lenders as your credit history deteriorates.

So, what can you do if you are one of those conservative Americans who prefer the government and employers not have access to your private life and records? 

In some states, a credit freeze can keep your employer out of your records. However, this is not the case in all states that allow a credit freeze. Go to the Federal Trade Commission for specific details on your state. 

My guess is that the prospective employer is simply trying to be prepared by doing some due diligence. My advice to you is that you check your reports yourself so that you know what any employer sees.

If you find mistakes, correct them.  If you have had some financial challenges, take charge right now.  Set some financial goals, create a budget, start saving regularly and pay your bills on time, every time. If the boss is going to raise the ante on your credit, you might as well be holding all the aces you can!