Why does employer check credit

Though prospective employers don't see your credit score in a credit check, they do see your open lines of credit such as mortgages , outstanding balances, auto or student loans, foreclosures, late or missed payments, any bankruptcies and collection accounts. Your credit score won't be affected by a potential employer conducting a credit check on you.

According to the HR. That means if there is a big discrepancy from a few years ago, an employer may still ask you about it even if your most recent credit history is healthy. They must have written consent before pulling an applicant's credit history.

In some states, there are specific restrictions when it comes to employers using credit information for employment decisions. Since employers are mainly checking to see any patterns or habits of mismanaging money when they conduct a credit check, the best way to prepare is to know what your credit report says before applying to any job no matter the position. And, be able to explain any negative entries. Every year, you're entitled to one free credit report from each of the main credit bureaus — Experian , Equifax and TransUnion.

You can access these reports for free at annualcreditreport. We recommend you don't access all three reports at the same time, but instead space one report out every four months. CreditWise provides access to your free TransUnion credit report. Keep in mind that while employers can legally pull your credit report, it's one of many factors that go into getting hired for a new job.

But there is a simple way to appear just as good on your credit report as you do in your job interview: Make sure you always pay your bills on time. Final notice, right to free copy: After it acts, the employer must follow up with a post-adverse action notice, giving the name of the credit report agency, its contact information and explaining your right to get a free copy of the report within 60 days.

Checking your own credit proactively lets you see what an employer would — and potentially fix any erroneous negative marks in advance. If you spot errors, get them corrected by using a dispute process. Pay all bills on time.

Payment history has the single biggest influence on your credit scores, so making on-time payments helps your score while also keeping delinquent marks off your report. Use available credit lightly. Monitor your credit report regularly. Some personal finance websites, such as NerdWallet, offer a free credit report and score that you can check whenever you like — giving you a way to regularly watch for negative marks in between the annual access granted by the credit bureaus.

See your free credit report. Know what's happening with your free credit report and know when and why your score changes. Get started. Why would an employer look at your credit? What do employers see when checking your credit?

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