Some employers perform credit checks on prospective and current employees and use the results in their employment decisions. Because people who work in banks have access to large amounts of money, a bank may require that employees have, and maintain, high credit scores.
Employer Credit Checks
Individual employers, including banks, can use credit checks as part of their hiring or internal promotion process. Employers run credit checks for several reasons, including a belief that an employee who responsibly manages his finances will be a better worker and the concern that an employee who is financially strapped may be distracted at work and possibly tempted to steal. Since bank employees often have access to both cash and sensitive personal data belonging to bank customers, banks often place a high priority on the results of employee credit checks.
Credit Report Limitations
The Fair Credit Reporting Act (FCRA) restricts the length of time that credit bureaus can list negative information on a credit report. Most negative information can be reported for only seven years, though a bankruptcy can remain on a report for up to 10 years. However, this law applies only to credit reports requested for employees making less than $75,000 per year. If someone applies for a job that earns more than $75,000, the credit bureau can include any and all information it has in its records without regard to length of time.
Explaining Negative Information
If you have negative information on your credit report and decide to apply for a job at a bank, be prepared to explain your situation .Explain to the hiring manager that your credit report contains negative items before he runs the credit check and tell him what you have done to rectify the situation. If your credit problems were due to circumstances outside your control, such as a medical problem or job loss, offer documentation of the situation.
If a bank, or any other employer, denies you employment or a promotion because of your credit report, it must be upfront about its reasons. It must also give you a copy of your credit report, along with the name of the credit bureau that compiled the report. You have the right to challenge any negative information on your credit report that you believe is untrue.
- Federal Trade Commission: Using Consumer Reports: What Employers Need to Know
- MSN Money: How Bad Credit Can Cost You a Job
- Business.gov: Pre-Employment Background Checks
- Federal Trade Commission: Employment Background Checks and Credit Reports
- Privacy Rights Clearinghouse: Employment Background Checks: A Jobseeker's Guide
- The Southern: Bill May Ban Pre-Employment Credit Checks
- USA.gov. "Credit Reports and Scores." Accessed June 18, 2020.
- Consumer Financial Protection Bureau. "What Is a Credit Score?" Accessed June 18, 2020.
- Consumer Financial Protection Bureau. "Check Your Credit Report at Least Once a Year." Accessed June 18, 2020.
- My FICO. "What's In Your Credit Report?" Accessed June 18, 2020.
- TransUnion. "Do You Know That There Are Three Credit Reporting Agencies?" Accessed June 18, 2020.
- TransUnion. "How Long Does it Take for a Credit Report to Update?" Accessed June 18, 2020.
- TransUnion. Public Records. Accessed June 18, 2020.
- Experian. "Can Utility Bills Appear on Your Credit Report?" Accessed June 18, 2020.
- Experian. "Can Medical Bills Hurt Your Credit?" Accessed June 25, 2020.
- Federal Trade Commission. "Credit Reports Now Free, Every Week." Accessed June 25, 2020.
Lainie Petersen lives in Chicago and is a full-time freelance writer. She has a long career in business and media and focuses her writing on business, legal, and personal finance issues. She holds a master's degree in library and information science from Dominican University.