Dear Consumer Ed: 

At a job interview I was asked if I would give my permission for the company to pull my credit report.  I know my credit is not very good, so I did not consent to this.  Now I'm concerned that refusing might cost me this job.  Can a company deny someone employment on this basis?

Consumer Ed Says:

Yes, an employer can deny employment based either on your refusal to let it see your credit report, or on the contents of the credit report itself.  In 2012, a bill was introduced in Georgia to prevent employers from firing, refusing to hire, or otherwise discriminating against someone because of his or her credit report, but the bill didn't pass.

This isn't to say that an employer can look at your credit report without your permission-it can't.  But an estimated 60% of employers perform credit checks.  Commonly, employers are looking for signs of irresponsibility, and some are worried about the potential for employee theft (although this is more common in fields like banking and finance).  Employers may also be concerned that an employee's worries about his/her debt will have an impact on job performance.  This concern is unfortunate, since many recently laid-off people have fallen behind on their bill payments precisely because their income has decreased.  Many employers consider an applicant's credit history because they are looking for a pattern showing that the applicant is able to pay, and actually does pay his or her debts, as a sign that the employee is a responsible person.

An employer must receive your written permission before it can obtain a copy of your credit report; this permission must be in its own document separate from any employment contract.   Giving this permission may give you some anxiety, especially if you know you have some negative credit history.  However, this might be a good time for you to go ahead and explain any negative information in your credit report.  You need to remember that if you don't give your permission, the employer is likely to (and is allowed to) reject your application on that ground. One caveat:  If you're applying to jobs over the internet, do not give your credit report out.  These requests are scams; any legitimate business can obtain credit reports from the major credit bureaus, and doesn't need for you to provide that information through a website.

If you give permission for the employer to look at your credit report, and it rejects your job application based on your credit, federal law requires that employer to notify you of this reason, and show you the report.  You can then obtain a copy from the reporting agency for free within 60 days of such notice from the employer.  If you find errors in the report, see www.consumer.ftc.gov for information about how to address this problem.

If you suspect your credit history is hampering your job search, here are some tips to help improve it:

 

  • Make a budget. Live within or, if you can, below your means.  Incorporate late bill payments into your budget.
  • If you have been denied credit, you may request a free credit report.  Learn why you were denied credit.  If you find any errors, contact the reporting agency to dispute the information-they must correct errors.
  • Make a list of what and to whom you owe.  Contact creditors to discuss payment options and begin catching up with late payments.
  • Look for ways to combine bills.  This may include transferring a credit card balance to another credit card with a lower interest rate while simultaneously reducing the number of credit cards you have.
  • Look for ways to decrease your spending.
  • Look for ways to increase your income.
  • Do not use credit until you have paid off most, or all, of your debt. Consider cancelling or hiding your credit cards for this period of time. 

 

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