Credit Report May Disqualify You From Employment

Tristan Powys (Credit Manager) @ Lucid Living

Credit report screening (ITC checks) of job applicants, by prospective employers and recruitment agencies dates back to the early 1980’s. Reviewing an applicant’s credit report was almost always without their knowledge or consent. If the applicant was disqualified because of a “blacklisting” on the credit bureau, they were never advised of this fact.

The use of an individual’s credit report, held by credit bureau, is regulated under the National Credit Act (NCA). The NCA does not disallow employment credit checks of job applicants, but it does prescribe the conditions under which it can be done.

In terms of the NCA, a prospective employer may only assess a job applicant’s credit report for the purpose of verifying employment and only with the consent of the applicant, which must be obtained prior to viewing their credit report.

In practice however, this is not the case and employers review the financial information on the job applicant’s credit report to make a determination of financial trust-worthiness.

Millions of people are now seeking employment as the jobless recovery lingers, making them vulnerable to losing job opportunities if they have late payments or are blacklisted on their credit reports.

Prospective employers usually have valid reasons for employment credit checks of job applicants. Workers with access to financial accounts or cash or who handle sensitive information, such as employee records, should have good standing in their personal financial affairs, the thinking goes. The same goes for military personnel who handle top-security materials.

If the employees are under pressure from collectors or creditors in their personal lives, they might be tempted to do something they shouldn’t, said John Ulzheimer, who is the author of several consumer credit books.

Here is what job applicants and existing employees need to know about employers checking their credit report:

• Employers must notify applicants or employees that they will check the credit reports before they do it. Applicants and employees must give their permission.

• If applicants or employees have information on their credit report they do not want employers to see, they should give an explanation before the employers obtain the credit report. If applicants deny access, that often means the applicant is disqualified.

• Errors occur frequently on credit reports. It is up to applicants and employees to make sure their credit reports are accurate.

• Employers, for their part, should be careful about their use of credit reports. Credit reports should not be the only screening tool for deciding who is disqualified. Employment credit checks should be limited to positions dealing with company finances and sensitive information.

Credit reports are compiled about individuals by credit bureaus, based on information that they procure from third parties, including credit providers. This information may be inaccurate, outdated and invalid.
Yet, credit reports are used to determine everything from interest rates on loans, insurance rates and even employment.

While consumers have the right to request a copy of their credit report, less than 7% did so in 2010. Make sure that the information on your credit report is accurate. Get yours now (Instant Credit Pulse) and see how the financial world and prospective employers will view you.