3 Ways To Reduce The Impact Of A Credit Check By Employers


Credit checks are also routine for some employers and some job openings. There are three major credit bureaus (Equifax, Experian, and TransUnion), and each produces its own report on you. Credit checks produce information like whether you’ve applied for a credit card; your work and address history; your maximum line of credit on each credit card, along with details about the terms of payment; whether and how often you’re late in payments; whether you’ve ever been referred to a collection agency; and whether you've been sued, arrested, or filed for bankruptcy. The credit bureaus use this information as part of their algorithms to calculate your credit score. Again, this information isn’t public, but it’s routinely requested as part of a background check so you need to know what those credit bureaus are saying about you. Because each credit bureau complies its information independently, you need to get and review a credit report from each bureau.

What happens if you discover negative information about yourself? Unfortunately, when it comes to credit checks, your options are limited. There are really only three ways to get deal with the negative information.

1. If The Negative Information Is False Or Otherwise In Error, Then Report It. Conduct these searches at least once a year—even if you’re know you’ve done nothing wrong. Fortunately, the Fair Credit Reporting Act (FCRA) entitles you to one free credit report (this report likely won’t have a credit score) from each bureau every 12 months. Don’t be tricked into paying for these reports. Go to AnnualCreditReport.com, which is according to the Federal Trade Commission, is “the ONLY authorized source for the free annual credit report that’s yours by law.”

Every credit bureau is staffed by people and gets information from people. Of course, people make mistakes (like superimposing Social Security numbers), and you want to uncover those mistakes as fast as possible. Otherwise, those lingering mistakes could prevent you from getting your dream job or advancing your career. So if you find a error, contact the credit bureau immediately to find out how to file a dispute. Find out if they need any proof from you, or other requirements. You might need to file the corrected information with all three credit bureaus, as well as follow up to be sure the negative information is actually removed.

2. If The Negative Information Is True, Then Correct The Underlying Problem That Caused The Negative Information To Appear. Sometimes, you’ll find negative information that is true. For example, maybe the credit report shows you’re delinquent in your credit card payments because you really are. In that case, there’s nothing you can do to get that adverse information removed other than by paying your bills on time. If you’re unsure what the underlying problem is, or uncertain how to correct it, then contact each credit bureau. Ask how to rectify the problem and find out how long the negative information will remain on your credit report. Once you’ve fixed the underlying problem, then follow up to be sure the negative information is timely removed.

If you need help, there are many reputable resources online that can take you step-by-step through the credit repair process, including renegotiating your interest rates and fees, as well as developing multi-pronged action plans to pay off consumer debt.

3. If The Negative Information Is True, And There Is No Underlying Problem That Can Be Corrected, Then Do Your Best To Move Forward. Again, sometimes that negative information is true. Maybe you really did file for personal bankruptcy. Maybe you really were late on many payments. And maybe there’s no way for you to get that information removed from public databases. In some cases, the information may automatically be purged after some set amount of time—negative information can stay on your credit report for up to 7 years (up to 10 years for some bankruptcy information). Either way, you can try to bury the information or distance yourself from it while you wait it out. And, of course, you can proactively and diligently build a positive credit history. Over time, many of the credit problems will have less and less impact on your job search and career development. After all, if you’ve had a clean, positive, and credit record, then employers are less likely to care about mistakes you made 5 years ago. Thankfully, the credit bureaus also report positive information and so, over time, your recent positive information can counterbalance the old negative information.