FAQ: How Do Credit Reports Work?

//FAQ: How Do Credit Reports Work?

FAQ: How Do Credit Reports Work?

Media pundits and some legislators have perpetuated many misconceptions around the use of credit reports in job applicant screening. Some commentators would have you believe that every employment decision hangs on your credit score. That’s simply not true, and we’re here to dispel some of the rumors.

First, most employers do not use credit reports to make hiring decisions about most jobs. Even before legislation was put in place to limit the use of credit reports, most companies were restricting credit reports to positions where it truly mattered. That means executives, people who had direct access to a company’s finances, people who had direct access to an individual’s financial information, etc. The average employee was not undergoing a credit report. Now, with the legislation in place, many jurisdictions have limited use of credit reports to these types of scenarios.

Second, credit reports for employment purposes do not include a credit score. While a credit report for employment includes the same type of information that credit bureaus use to come up with scores, credit bureaus do not provide the actual score.

Finally, when an employer requests a credit report for employment purposes, it does not impact your credit. Generally speaking, there are two types of requests: a “hard inquiry” which is used by lenders to determine an individual’s credit worthiness before issuing credit, and a “soft inquiry” which is used, for example, when you check your own credit history. The hard pull can impact your credit, but soft pulls do not – and a credit report for employment is considered a soft pull. For more information on hard inquiries versus soft inquiries check out TransUnion’s blog post on the matter.

By | 2018-05-24T08:28:45+00:00 May 23rd, 2018|FAQs|0 Comments