Getting a sweet interest rate on your next loan may not be the only reason to have a good credit score. More and more, it's becoming part of a standard hiring process, even for people who won't have ready access to money in the course of the job. Kerry Hannon over at Forbes states that:
Six out of ten private employers check the credit histories of at least some of their job applicants, and 13 percent conduct them on all candidates, according to a survey by the Society for Human Resource Management. Why? Presumably to prevent theft or embezzlement, fear of lawsuits for a hiring mistake if their employees do something wrong, or to get a sense of the overall dependability of a job candidate.
That line of reasoning, of course, spans to IT, where employees regularly have access to systems with financial or personal data. Invasion of privacy you shout? Maybe not according to CreditCards.com. It's part of a process to make sure you are who you say you are, and requires your consent.
When a company asks to see your credit, they automatically become bound by the Fair Credit Reporting Act, a federal law governing the use of consumer credit information. Your consent needs to be in writing and you need to be notified "conspicuously." "They can't just give you some forms to quickly fill out before your interview and have you sign a consent form without explaining what it is..."
Some states are crying foul on this practice, enacting laws to at least provide some protections...in some cases.  Check out what Forbes has to say on the recent California law.
Effective January 1, 2012, a California employer cannot review a credit report for hiring or decisions to continue employment of current employees. Exceptions: if the job is with the state Department of Justice, management positions, law enforcement jobs, and jobs that entail access to money, financial accounts, or personal information. (There are other caveats, too.) Yes, you read that right. Those of you already employed aren’t safe from credit checks either. Some employers regularly check credit reports when firing, promoting, or determining compensation for workers.
So it seems that even those of us living in California, Connecticut, Hawaii, Illinois, Maryland, Oregon, or Washington should still be concerned about this. And you should be too. While we wait for this to be settled in law, we should all start taking a look at our credit reports and doing what we can to improve them. Again, Forbes has some tips on that too.
  • Check for mistakes on your credit report annually. Visit www.annualcreditreport.com to request a free credit report from the three major consumer credit reporting agencies–Experian, Equifax and TransUnion. Clean up anything that’s wrong or looks questionable. This can take a little time.
  • Boost your credit score. To get your score up, don’t open new accounts, transfer balances or close accounts, says Credit.com’s personal finance expert, Gerri Detweiller. Closing accounts sounds like a good idea, but in reality, it lowers your available credit and pushes your current ratio of debt higher. Pay off high-interest credit cards, if possible. Pay your bills on time. All it takes is one late payment to crush your score.
We're interested in how this is affecting you. Have you had to submit to a credit report? Ever lost out on a job offer due to a bad score? Let us know in the comments below.