Applying for a new job can feel like a full-time job in and of itself. There is the resume to review, edit, and update. There are cover letters to draft and interviews to prepare for. You will likely research different companies and plan what you will wear to interviews. All of this is fairly standard for a job applicant. There may be one thing, however, that you are overlooking: reviewing your credit history.
Use of Credit History in Hiring
Did you know that the use of credit history in hiring is not only permissible but is fairly common, particularly in the financial services industry? While there are federal and state laws in place that protect a job applicant’s privacy rights pertaining to background checks and more, companies are well within their rights to use credit report information in making hiring decisions.
The Fair Credit Reporting Act (FCRA), however, regulates consumer reporting agencies and restricts what situations credit reports may be used in. Employment situations are permitted the use of credit reporting information. New Jersey has state legislation that largely reflects that language contained in the FCRA and permits employers to use credit history in hiring decisions. Under both laws, an employer must obtain the job applicant’s written consent before obtaining the credit report.
Furthermore, New Jersey’s version of the FCRA requires employers to provide a job applicant with a written disclosure notifying the applicant that credit reports commonly include information pertaining to an applicant’s character and mode of living, among other things. The employer must also provide the job applicant with a copy of the report if requested and is obligated to inform the applicant if the employer intends to take adverse action based on the information contained in the credit report.
While a credit report does not reveal your credit score, it can reveal a great deal about you. It details your credit history. This includes open lines of credit you have, such as a mortgage, as well as outstanding balances and any late or missed payments. It also includes things like your student loans, any bankruptcies you may have in your history, and outstanding collection accounts.
In some cases, a company will want to use an applicant’s credit history merely for security purposes. It is a good way of verifying someone’s identity, as well as background and education. In other cases, a company will use an applicant’s credit history to see how responsible an applicant is in managing his or her own finances. You can probably understand why the use of credit history is so prominent in the financial services industry. These are companies that want employees in financial management to be able to manage their own finances.
A potential employee running a credit check on an applicant is likely to do so in the final stages of the hiring process. In fact, it may very well be one of the last things they look into prior to the final hiring decision. In any case, reviewing your credit history prior to your job search may be well worth the effort.