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Who Uses Your Credit Report

Your Credit Score: How Employers Use It

It has been stated that a credit report is like a story, one that well summarizes the personal character of the borrower.  After all, creditors want to be informed if their potential borrower is a high risk and if they should decline an offer or raise the interest rates to cover their own potential loss.  If a consumer has had problems with credit in the past that is a sign that he or she will likely abuse credit again. 

How would you personally feel if someone close to you (i.e. a son-in-law or a business partner) had a questionable pass in which they fell thousands of dollars into debt?  What if this person had a history of car repossessions?  What if they owed $20,000 to several credit card companies?  What if they had a history of late payments?  When the history is made personal, then you may start to appreciate poor credit score and how the creditors feel when they review a new applicant’s file. 

A little known fact is that even employers have the right to analyze a person’s credit report score.  As job fields become closed and increasingly competitive, you can bet that more employers are utilizing credit check options than ever before.  The latest statistics show that credit checks for employment verification have increased at least 50%.  If you have a poor credit score how might an employer view this?  Is the employer looking to hire someone that is responsible with money?  If an applicant has a history of making impulsive decisions, ones that he cannot financially recover from, then this could turn out to be the equivalent of a bad job interview.

Of course, you could rationalize that a credit score, and how you have paid your bills in the past, is largely irrelevant to most employers who simply want identity verification.  Relying on character references is becoming less reliable than verifying records and professionally screening workers beforehand.  It’s true that credit checks can verify demographic and location information.  They will include identifiers such as name, spouse, social security number, alias, address, phone and previous employment.  Financial information may not be the employer’s priority.

However, if an employer has to choose between a worker with a list of repossessions, charge offs, delinquent accounts and civil judgments vs. a worker with perfect credit, who do you think is going to be hired?  This certainly illustrates that having good credit pays off in the end.

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I didn't realize that there are other types of credit bureaus, including one that only deals with your checking account history. The credit bureau is "ChexSystems" and they need to comply with the same rules as regular credit bureaus. I was happy to find out that I could get my ChexSystems record cleared up! Read More