Who’s Checking My Credit?

I know every time I apply for a credit card, buy a car, or open a bank account, I will receive a credit check from the lender. That’s understandable because the lenders need my credit history to assess my ability to pay the loan back. In these cases, I am the borrower and the banks and credit card companies want to make sure I won’t default. But who else is checking my credit?

An article on MSN Money, 5 People Who Check Your Credit, says my credit report may be pulled out by:

  • Lenders
  • Insurers
  • Landlords
  • Cell phone carriers
  • Employers

I can see why the first four types of people want my credit, but why the employer-to-be? Does my bad credit mean I can’t fulfill my job duty? The MSN Money article reasons:

When you’re applying for a job, potential employers can pull your credit report as long as they notify you first. And, in fact, about 35% of them do, according to the Society for Human Resource Management. Why? Bad credit can be a signal of irresponsibility, or employers might be worried you’ll spend more time fretting about your financial woes than concentrating on the job.

I am sure I have other obligations that require much more time than the time I spend on “fretting about my financial woes.” Though I wasn’t asked by any employer for permission to check my credit history so far, this whole idea of “bad credit can be a signal of irresponsibility” doesn’t really make to much sense to me. In fact, it sounds like a kind of discrimination against people without a perfect credit.

So if you are asked to provide credit information after a job interview, what would you do? For me, well, I have to say it depends on the size of the pay check. If the job pays nicely, I probably don’t mind them have a look, though I don’t like it.

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6 Responses to “Who’s Checking My Credit?”

  1. Jeremy |  Apr 18, 2007 at 10:05 am

    Even if an employer checks your credit I don’t think it holds much weight. Maybe if deciding who to hire came down to two people with identical skills and that was used as a factor to make a decision, but in general I don’t think it matters a whole lot.

    The last two jobs I’ve had and applied for ran my credit, and I can say with certainty that during the time those checks were ran, my credit was borderline poor with many negative remarks, collections, late payments, etc. I probably couldn’t have gotten a new credit card if I wanted.

    All of the negative stuff on the report was from a failed business that I had, and although it was a corporation many of the debts had an underlying personal guarantee which meant once payments didn’t make it in on time, it moved to my personal credit. (Long story and a hard lesson learned!)

    But it didn’t stop me from getting the jobs, and one of them was for a fairly competitive position. I think ultimately it comes down to your skills and whether or not you will bring to the table what the company is looking for. I doubt your credit score will have a significant impact on whether or not you get the job.

    That’s not to say I agree with them being able to pull your credit, but since it probably won’t affect your chances to a large degree, it is what it is I guess.

  2. Tim |  Apr 19, 2007 at 3:12 pm

    if you are getting a job which requires a security clearance, they will definitely pull a credit report.

    bad credit can be a signal of irresponsibility as well as susceptibility. it isn’t an end all indicator, but if it is taken as a whole in terms of habit and tendency, then it is a useful tool.

  3. Tim |  Apr 19, 2007 at 3:17 pm

    if bad credit wasn’t an indicator of irresponsibility, then the credit card companies would disapprove loans or put higher interest on those with bad credit history. the chances are greater and the risk is higher.

    people who have risky credit histories are also more likely to steal (yeah we all take post it notes from work), have more problems associated with finances that will take up time which leads to time away from work to resolve or time during work on the phone to resolve; people also will worry about finances more rather than focusing on productivity. now this is just generalizations, but as much as lenders research the probabilities i’d tend to think that the research has merit.

    again, it has to be taken into big picture context. i don’t have an issue with employers taking a looksy, but it cannot be a single variable.

  4. The Sun |  Apr 20, 2007 at 1:35 pm

    Jeremy & Tim: While I agree a bad credit may indicate troubles beyond finance, but I don’t think a credit report can provide a complete picture on why the person gets into the situation in the first place. As Jeremy said, a bad move can snowball into all areas financially, but that doesn’t make the person irresponsible for other obligations. And the way the credit company looks at credit report is sure different from the way a potential employer looks at it. Credit company only concerns their money, an employer should only care if the person can perform his job duty effectively or not. There are a lot of things that will affect worker’s productivity, like caring a sick family member which I believe requires much more time. But is it OK for the employer to ask if everyone in the family is healthy?

  5. Ray |  Apr 24, 2007 at 10:47 am

    The Sun,

    I’m sure everyone agrees that bad credit doesn’t provide a complete picture, but if you can’t manage your own finances why should a company hire you to work for them and be responsible enough to manage their business.

    I’d much rather hire someone with good credit than bad credit. I bet if you look at overall credit scores, the higher scores would be at work on time, take less sick leave, more trusting and do a better job than folks with a lower credit score.

    Sure it doesn’t cover all the bases, but it is a tool that helps potential employers to weed out undesirables.