You’ve found your dream job. You’ve smashed the interview. Now you’re playing the waiting game. Dissecting and second guessing every detail of your application. But what you might not know is if there will be a credit check for employment. And you may be curious as to whether your current credit score has an impact on your job offer.
It used to be that pre-employment credit checks were only done for jobs in the financial sector, but increasingly more industries are starting to use them. So, will your conditional job offer be subject to a pre-employment credit check? What do they look at and what will either lose you, or land you, a job? Here are the seven things you need to know:
1. What is a pre-employment credit check?
When you apply for a job, the potential employer will sometimes run a pre-employment credit check as part of their decision making. This is where they are able to look at your credit report. You can find out more about your credit report here. A pre-employment credit check is a way for a potential employer to make sure you are who you say you are and get a glimpse at your financial history.
2. Why do potential employers run credit checks?
It used to be that only financial institutions would run credit checks on people applying for jobs. But more employers are starting to do it, including in industries like healthcare and engineering. There are three main things that potential employers are looking for when checking your credit history as part of your application:
Are you who you say you are?
A potential employer might want to run a credit check to make sure you actually are who you say you are. For example, by checking the electoral roll they can see whether your current address matches the one listed on your CV.
Employers can also check your name and basic information. This is the most common check. It is much less likely that employers will dig any deeper into your credit history. And they should tell you if they intend to.
Can you be trusted?
Running a credit check gives a potential employer an idea of your creditworthiness. This is mainly for jobs where you will have access to large sums of money. The idea is that people with bad debt are more likely to commit employee fraud.
Of course, this isn’t really foolproof. People without debt are no more or less likely to commit fraud when presented with an opportunity! But an employer may consider this to be due diligence. And they can use it to help them make decisions on candidates. It is also required by law in some industries.
What sort of person are you?
An employer might run a pre-employment credit check on you to build a picture of your character. Simply put, if you are the sort of person who makes payments on time and in full, then, in their eyes, you are more likely to be responsible and organised.
We all know this isn’t always an accurate reflection of someone’s character. Your credit history totally ignores context. But it is good to know that this may have an impact on an employer’s decision making when you are applying for a job.
Although this might all sound a bit scary, it is important to remember that in-depth credit searches are rare for most jobs — and if they do require one, they should let you know beforehand if they intend to do so.
For jobs outside of the financial sector, it is unlikely that your application will be checked at this level. They will mainly just want to make sure you are the person you say you are with a simple check.
3. What can potential employers see on a credit check?
A typical pre-employment credit check will look at your public data — searching for any defaults and county court judgements (CCJs), bankruptcies, administration orders and your electoral roll registration. This gives your potential employer a view of who you are and a brief overview of your creditworthiness.
It’s important to say that pre-employment checks at any level are not able to screen your private financial history. This means that they can’t see your credit card transactions, how much you earn, your religion, race or ethnicity, or your marital status. The only focus is on your public information.
4. When do potential employers make credit checks?
When you apply for a job in the financial sector, or at a law firm, they have to run a credit check on you by law. If you are applying for jobs in other sectors a detailed check is unlikely.
When the credit search is done is entirely down to the individual employer. Most choose to do it before they give you the position, but some will run the credit check after they make a job offer, similar to character references. If you were to fail a credit check after being conditionally offered a job, that offer may then actually be withdrawn.
5. Does a pre-employment credit check affect my credit score?
The impact that a credit search has on your credit score relates to whether it is a soft or hard search. You can read more about soft vs hard credit searches in our blog.
A hard search will leave a mark on your credit history for six months. Having too many marks within a six month period can have a negative impact on your score. However, a soft search will not affect your credit score at all.
So, the short answer is no. When a potential employer runs a pre-employment credit check on you, it is a soft search. They can check the details on your CV are correct and get a surface glance at your financial history. Only you will be able to see this soft search on your credit report. It won’t be listed for other companies to view, such as lenders and landlords.
6. What credit score is too low for a job?
You might be wondering if employers can check your credit score number. They can’t. They can see public information such as your address, CCJs and bankruptcies. But they can’t see the specific three-digit credit score.
So, there isn’t a magic number that will mean you don’t get a job. But as with everything related to your credit score, you always want it to be as strong as possible to put yourself in the best possible position.
7. How can I improve my pre-employment credit check?
Because a UK pre-employment credit check is based on your credit report, the best way to improve what a potential employer sees when they do a search is to make sure that your credit report is as healthy as possible. You can check out what our Loqbox experts say about improving your credit score here.
But a good place to start is to look at your credit score. This is something that you can do right now for free and without causing harming your score using these services:
*In the spirit of clarity, if you decide to sign up for ClearScore using this link, we receive a small commission.
If you want to quickly improve your credit score with the UK’s three main credit reference agencies (Experian, Equifax and TransUnion), the next step is to get started with Loqbox.