WTOL.com, Toledo's News Leader, News 11 | Some companies demand prospective employees' credit reports

Some companies demand prospective employees' credit reports

TOLEDO, Ohio (WTOL) - Many job seekers have signed waivers to allow potential employers access to more than just work history, but some companies now want employees' credit histories.

Stacie Moss, an area manager of Toledo's Job 1 USA, says companies screen candidates that will have access to money, checks or possible security clearance. "There's the potential for fraud in some situations... that may develop if they have large amounts of cash."

Moss also says employers look at the credit report as a comprehensive overview of the job seeker's financial responsibility.

Basically, an employer wants to make sure an employee doesn't steal. The report's payment history shows if someone has kept their financial commitments. Also, debt-to-income ratio shows if a potential employee owes too much and easy access to money might be too tempting for someone in debt.

"Most employers... are just looking for negative or potentially negative aspects," said Moss.

BONUS MATERIAL:

Experts advise job seekers to take advantage of free annual credit reports to clear up inconsistencies.

U.S. Govt.: What employers need to know about using pre-employment credit checks

Once a potential employee gives consent, employers have broad access. According to the Privacy Rights Clearinghouse, a consumer rights organization, areas of inquiry can include:

1. Why do some employers run credit checks on people who are applying for jobs?

The most common reason is to check an applicant's financial stability and debts. These are important factors for positions that require access to large amounts of money or sensitive information. The idea is that if a person is struggling financially, he or she is more likely to steal from the employer to try to fill the gap in his finances.

2. What types of things are employers looking for when reviewing credit reports of job applicants?

Usually, potential employers who pull an applicant's credit report are looking for indicators of good financial health. Items that may give a potential employer pause could include a consistent failure to pay debts in a timely manner, excessive debt compared to income (or income from a previous job if the applicant is not currently working) or any unpaid judgments.

3. Are there certain types of positions that are more likely to require pre-employment credit screening?

As noted above, positions with the government or with government contractors for which security clearances are required will almost always require credit checks. Also, banks and other financial institutions often pull credit when hiring for positions that involve handling large amounts of money. Companies that do use credit reports often use them only for applicants at mid-level management positions and above, although this varies significantly from company to company.

4. How can job seekers educate themselves to find out how their credit will appear to potential employers?

The same things that influence one's credit score, such as payment history and debt load, are what employers will look at when reviewing an applicant's credit report. So, the more job seekers learn about credit reporting and scoring, the better. A credit score actually involves three scores from the three major credit reporting agencies -- Equifax, Experian and TransUnion. All three are required to provide a credit report. Consumers can access credit reports once each year for free at www.annualcreditreport.com.

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