Why Do Employers Need A Credit Check?

Any employment background check will often include a copy of your credit report.

The three major credit reporting agencies -- Experian, TransUnion, and Equifax -- provide a modified version of the credit report called an "employment report." An "employment report" includes information about your credit-payment history and other credit habits from which current or potential employers might draw conclusions about you.

The employment report provides everything a standard credit report would provide. However it doesn't include your credit score or date of birth. Nor does it place an "inquiry" on your credit file that may be seen by a company looking to issue you credit. Having too many credit inquiries tends to lower your credit score.

Even employers who offer jobs without money benefit from the credit report in an employee background check. Employers use your credit history to gauge the perspective employee's level of responsibility. This is another area where employee background checks become quite objective. Employers who see that you cannot pay your bills may see it as indicative of your unreliability or lack of responsibility. Bad credit can greatly affect your employment background check.

Job seekers who face an employment background check should check their own credit report regularly and make sure there are no erroneous marks against them -- it's also a good way to see what your prospective employers will see with their own background checks.

Even a lack of credit could hurt a prospective employee.

The FCRA says only that certain things like negative information more than seven years old cannot be considered. The absence of a credit history, however, can also be considered.