Will Bad Credit Hurt My Chances Of Finding A Job

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jobsearchSome companies use credit history to discover how responsible an person is because they don’t want to bring in someone who’ll probably steal from them or perpetrate fraud at work than will cost an company more than an worker is worth.

The Federal Fair Credit Reporting Act (FCRA) is an organization that develops national standards for employment screening. Naturally, the FCRA’s standards are only applicable to background checks conducted by third party credit reporting agencies, and do not apply when employers run their own employment screening.

The FCRA calls background checks and employment screenings (that rely on credit) “consumer reports”, which likewise refers to your credit report in some instances. The laws on consumer reports change from state to state, so it is a wise idea to investigate the laws of your state with regard to such reports. Several states encourage the usage of report, while others restrict the usage of credit reports for employment purposes.

According to the National Fair Credit Reporting Act, specific activities cannot be reported:

Nonetheless, such restrictions do not apply for high-profile jobs that demand added security clearance. An employer may choose to conduct a background check through another method, such as private investigator which,the FCRA doesn’t protect against. Also, occupations with a salary upwards of $75,000 aren’t subject to these restrictions, and any and all advice may be used to make an employment decision.

It’s standard procedure for employment background checks or consumer reports to comprise a copy of your credit report. Credit reporting agencies like Equifax, Experian, and Transunion supply investigating employers with a tailored copy of your credit report (occasionally referred to as an employment report). This report details your credit-payment history along with any other credit behaviors that may influence an employer’s decision to hire an individual.

This all sounds very intimidating for people who have bad or “just okay” credit, but rest insured employer’s decisions aren’t a light issue. Under the Federal Fair Credit Reporting Act, the employer must follow a series of steps if advice from the consumer report is used in determining an undesirable action. Under the FCRA undesirable activities are recognized as rejecting a job applicant, terminating an employee, annull a job offer, or refusing a request for or forthcoming promotion.

By law, the company is required to supply the applicant with a pre-adverse action disclosure, a detailed copy of the consumer report and advice about the person’s rights under the FCRA. As of January 1st 2013, Companies using consumer report background checks have to use and provide job applicants and employees with a Summary of Consumer Rights form at the time of application.

Employers are also required to clarify information and educate their workers and applicants that the Consumer Financial Protection Bureau (CFPB) should now be contacted for all inquiries and additional advice regarding such determination.

The FCRA merely allows companies access to advice gathered from background checks JUST after written approval from the worker or applicant was obtained. Such advice should be gathered at the time of application or alter, including a promotion, as the employer will have to present this before a credit reporting agency before this information is released. 

Under the FCRA, once the unfavorable action is decided on, the person in question — the employee or potential employee must be given a notice of the shape of that record. The file must contain the name, address, and phone number of the employment screening agency. The FCRA requires that a statement detailing the person’s right to challenge the accuracy or thoroughness of the entire, or any part of, the report, together with appropriate information for doing so.

The Federal Fair Credit Reporting Act only requires a one time authorization, which means that only one notice and authorization is required to release consumer records to an employer. This authority doesn’t have to be revived, even for obtaining additional reports at any future time during the individual’s employment. Companies are permitted to perform credit checks for the purpose of deciding whether or not to keep or release an employee; inferior credit normally signals to an employer that a person is more likely to perpetrate fraud or larceny from an organization. Employers may choose to occasionally run credit and background checks for any reason they pick.


Keep in mind that the Federal Fair Credit Regulation Act is not responsible for supervising all credit and consumer reports. For instance, if the company has the means to run the screening process themselves, the FCRA will not require them to conform to their regulation, leaving no basis for an individual to dispute the decision. Additionally, if the company can discover another reason to reject the person, for example selecting a more competent candidate, then they are not required to inform the applicant of an adverse choice adhering to the FCRA rules – an action an individual also can not dispute.

Some states have developed additional regulations that restrict the usage of consumer reports for employment decisions. Such states require the report to only be used when the credit report will prove beneficial by being used to make a decision regarding employment for a place with a significant connection between credit and job responsibilities (for instance, measuring the credit score of someone who’ll be handling large amounts of cash is an excellent use of consumer reports). 

As a consequence of consumer reports, many hard working Americans may be turned away from decent jobs, making it that much more difficult for people, particularly minority groups, to escape from debt.

Prospective companies use credit history to discover how responsible an individual is. The EEOC explains the belief that not paying your bills makes you irresponsible and unreliable is unjust, but the fact remains that employers have faced trying times too. 

In today’s age, having poor credit is more dangerous to you than it used to be. If you believe you’ve been wrongly turned away , have general questions and/or specific questions on whether or not a particular employer can use consumer reports for choices, contact your state’s department of labor or Consumer Financial Protection Bureau (CFPB) for aid.



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