What you need to know about credit reports and the job search
Via Mashable : While the application you slaved over for your dream job may be impeccable, there’s another important question to ask yourself during the hiring process: When’s the last time you looked at your credit report?
Around 47% of employers perform credit background checks on potential talent, according to a Society for Human Resource Management study. Credit reports often include information on every credit account you have, whether or not you make your payments on time, foreclosures, accounts in collections, repossessions and bankruptcies.
There are a couple caveats to keep in mind: The Fair Credit Reporting Act prohibits employers from pulling credit reports without applicant permission. Some states — California, Connecticut, Hawaii, Illinois, Maryland, Oregon and Washington — either don’t allow employers to pull credit reports or limit their use in hiring decisions. If you live in one of these states, you’re less likely to have your credit report come into play during a hiring decision; and regardless of where you live in the U.S., you’ll need to give permission before a hiring manager can access your report.
But even though the chances are slim that a negative credit report will keep you from getting a job — 80% of organizations that conduct credit background checks hired candidates with negative reflections on their credit reports, the SHRM study reports — it’s still worth being one step ahead of employers if you know that your report has questionable content. Below are a few ways to stay ahead of the game when it comes to credit reports and the job search.
What credit reports mean to employers
When a company hires you, its executives are deciding to invest trust, money and time in you. Managers want to know their investment is secure, and they’ll look for trustworthiness, responsibility and accountability in every employee they bring on board. If you’re struggling financially, you may appear to have poor decision-making skills and a lack of responsibility. In some higher-level positions, employers also may be concerned with a candidate’s financial trustworthiness — particularly if the position involves the handling of company funds. The last thing any company wants is an employee who can’t be trusted when millions of dollars are on the line.
But what’s truly concerning about a credit report is the amount of information it fails to relate to potential employers. It doesn’t specify, for example, whether a life event caused your report to take an unfavorable hit, or if it was negatively affected by identify theft. While these issues are no fault of your own, an employer won’t know that just by looking at your report.
How to be prepared
Because your report tells only a partial story, it’s your job to fill in the gaps. If you know your credit score could cause an issue, you need to be ready to explain your situation. Here are four steps you can take to prepare yourself for an employer who pulls your credit report.
Be proactive. Before you apply for any job, it’s a good idea to pull your own credit report. Review the document and assess any potential mistakes — reporting and removing false information from the report can improve your credit score. Even if the report is accurate, when you know exactly what information is on your report, you can respond more honestly to any questions your potential employer may ask.
Keep in mind that it can take 30 to 60 days to get misinformation removed. If the process isn’t going to be completed before you submit your application, and you know that the employer will be checking into your credit, you may want to include a short statement explaining the inaccuracies.
Be honest. If you know that an employer will be assessing your credit report, it’s important to be up front with them about any negative credit information, which may help your case and make you more relatable. When you offer an explanation during a face-to-face interview, you might find a sympathetic ear. Telling the truth gives you the opportunity to forge a deeper connection with a potential decision-maker during your interview.
Request a meeting. Sometimes it’s easier to address any potential credit concerns during an in-person meeting or phone interview. This opportunity can give you a chance to explain your circumstances and offer reassurance that you’re the right person for the job. Offer a brief statement in your cover letter or resume that requests a face-to-face interview. If the employer agrees, you can use the time to address any potential concerns. An employer who’s truly interested in hiring you will give you the time you need to explain yourself.
Provide a statement of hardships. Due to a high number of applicants, spoken interaction with a potential employer isn’t always possible. When that’s the case, you can include a statement of hardships that resulted in your financial issues. There are many valid, common reasons behind credit problems with which employers may empathize, so don’t be afraid to discuss your personal experience.
However, if the truth behind your credit card woes revolves around your love of expensive items, then it’s unlikely your irresponsible spending habits will do much to sway your potential employer.
By delivering proactive honesty in an interview or application, you may be able to ensure that the hard work you put into the application for your dream job is worth the effort.
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