Yes they can, anytime you apply for a job, the employer can have you sign a release that permits them to pull your credit reports at will.
You might want to start thinking of your credit score being another parameter why you may get rejected for a job. Sixty percent of employers recently surveyed by the Society of Human Resource Management said they run credit checks on all or some potential new hires. That’s up from 43 percent in 2006 and 25 percent in 1998.Experts said, in a range of 300-850, a score above 700 makes you highly eligible for easy loan or credit.
Which employers are the ones who will be interested in your credit history?
Certain categories of employers regularly review credit histories [such as] banks, brokerage houses, government and other financial institutions might be interested.
Why do they want this information? What will they do with it?
Credit report information is an excellent data point when comparing and contrasting two or more candidates for the same position,” says Jay Meschke, president of EFL Associates, an executive search company.
- While there might be genuine reasons for a person’s bad credit score or report, employers can perceive this as a sign of being irresponsible and incapable of taking care of things. A person might have 10 figure salary but is irresponsible with his credit payments, employers might feel he will act same in his professional journey. Just as how companies and employers are wary of criminal records, an extremely bad credit report can have the same effect.
- Additionally, employers can perceive a person with a bad credit report as dishonest and a potential threat to the workplace. So it is a risk to hire a person who can manipulate professionally
- Credit scores are also examined by employers to understand the financial health of potential employees. They might feel that your performance would affect if you have a huge debt burden.
What steps should you take to ensure that you do not lose the job because of your credit score?
- Pay all bills,EMI s’ on time. Payment history has the single biggest influence on your credit scores, so making on-time payments helps your score and is the best proactive approach.
- Candidates must watch out for any possible error in their credit report, false information passed to CIBIL – which could reflect negatively on the report. If you have already availed a loan or have unpaid credit card bills, it is a good idea to obtain your credit report at regular intervals. By doing so, you will know your credit score beforehand which can help you take necessary steps to improve or maintain the score.
- Keep a healthy mix of secured (home loans) and unsecured credit (credit cards)—which is not linked to any collateral—and keep your credit utilization ratio within 30% which will boost your credit score. Credit utilization ratio is the proportion of the credit card limit utilized by a person and a ratio of over 30–40% is considered as a sign of credit hungriness. Hence, credit bureaus reduce the credit score when this level is exceeded.