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Tuesday, October 21, 2008

Employers May Check Your Credit Report

And you need to know it. This article from Experian, one of the credit reporting agencies, provides a quick overview of what's in the report, and why a prospective employer might want to see it.

If an employer fails to hire you based on a credit report, they must disclose that information to you, according to the Fair Credit Reporting Act. (Source). This requirement is true even if the credit report wasn't the only, or even the major reason you were turned down for a job.

The employer or prospective employer must get your written permission to run a credit report on you, according to Steve Bucci, of Money Management International. Bucci, like many financial advisors, suggests that you check your credit report on a regular (maybe annual) basis, so you know what's in it.

According to the New York Daily News, as of about a year ago, none of the three reporting bureaus included your actual credit score or details of your credit cards in employment reports, nor do they report date of birth or marital status, factors which cannot be legally used in hiring decisions.

My suspicion is that the rise in employer use of credit reporting has a lot to do with marketing by the credit agencies. See, for example, Experian's "Employment Insights" product description.

Here's what Experian includes on the report:
* Consumer identification, including Social Security number
* Address information, including length of time at current and previous addresses
* Employment information, providing insight regarding an applicant's previous work history
* Other names used, such as maiden names and aliases
* Public record information on bankruptcies, liens and judgments against the applicant
* Credit history providing an objective overview of how financial obligations are handled
* Demographics Band (including driver’s license and phone number verifications), Profile Summary (including payment patterns), Fraud ShieldSM and Direct CheckSM are optional add-on services

Experian will also provide the applicant with a free credit report, regardless of the outcome of the employer's decision.

My take: Ugh.

This post has been included in this week's Carnival of Debt Reduction, , where you can find lots of other goodies. This week's carnival is hosted by Green Panda Treehouse. May the force be with you.

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