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Nearly a million jobs were filled in July — here's how your credit report can impact your next interview

Here's why your credit report can impact your chance of landing a job.

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Twenty/20
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Employment numbers continue their recovery from the pandemic-related mass layoffs in March 2020, with jobs data on Friday beating expectations.

Nonfarm payrolls increased by 943,000 jobs, according to the U.S. Labor Department. This slides overall unemployment down to 5.4%, down from the pandemic high of nearly 15% in Apr. 2020. Job openings are surging in the hospitality, government and business services sectors.

While your resume and LinkedIn profile may be up to par for that next position, there is one factor on your job application you may not be considering, but your prospective employer is — your credit report.

Why your credit report matters when applying for work

Your credit report is an overall report card of your ability to manage credit and pay your debts back in a timely manner. This report is more commonly known to matter when applying for an auto loan, mortgage or credit card.

Many jurisdictions have banned employers from considering credit reports when evaluating candidates, and in recent years, Congress has stepped in to attempt to ban the practice all together. However, many states still reserve the right to consider your credit report when evaluating you for a job.

The states that have enacted laws to limit employers rights to your credit reports are: California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington. Several municipalities including New York City and Chicago have their own limits as well.

While they will see information similar to what a lender can review, an employer will not receive the actual numerical figure of your credit score.

Why employers check your credit

Potential employers check your credit for a few reasons, including verifying your identity, but also to peer into your level of financial responsibility. If your credit report is less than favorable, it may sway the employer's decision when choosing the best candidate.

Critics state this practice unfairly targets low-income and minority communities, barring them from potential employment opportunities.

Additionally, millions of Americans credit reports aren't perfectly accurate. According to a 2021 survey by Consumer Reports, 12% of Americans who checked their credit report said they found at least one error. And these errors appear to be rising, as the Consumer Financial Protection Bureau (CFPB) reported a 54% rise in credit bureau complaints in 2020 from the year prior.

So if you are on the job hunt, consider using a credit monitoring service to avoid one more roadblock between you and your next job.

How credit monitoring services work

Credit monitoring services monitor all activity around your credit report. It is possible to do this manually by requesting a free credit report from AnnualCreditReport.com, but a monitoring service will automate the process for you. You can also receive your credit score for free through many banks and services, but the information they give you may not be as detailed as a full credit report.

In the case you are offered a job and consent to a background check, a credit monitoring service will alert you that someone is pulling your credit report. In addition to an employer checking your credit report, you will be alerted if you have one of the following actions initiated on your credit report:

  • Hard inquiries on your credit report, such as applying for a credit card
  • New accounts opened in your name, such as a new bank account
  • Updated balances and payments on your credit products
  • New address or name changes to your credit file
  • If your personal information is found on the dark web, such as your social security number
  • Public records updates, such as bankruptcies

Using a credit monitoring service is a great way to spot fraudulent activity quickly or identify any errors that are already present, which helps avoid any potential damage to your credit report.

Free vs. paid credit monitoring services

If a credit monitoring service makes sense for your situation, there are both free and paid services to consider.

If you decide to pay for credit monitoring, there are affordable options that are either billed monthly or yearly. The paid services are not necessarily 'better' per se, but they will give you more features that allow for a more in-depth look into all three of your credit reports (Experian, TransUnion and Equifax).

If you want to give a free credit monitoring service a try, you may already have access through your bank or credit card servicer. Large financial institutions like Capital One offer free credit monitoring services for anyone to use. And if you are an American Express cardholder, you have 24/7 access to your credit score as well.

Consider Experian's free credit monitoring service which has a variety of helpful features that are similar to what you'd find in the premium Experian service:

Experian Dark Web Scan + Credit Monitoring

On Experian's secure site
  • Cost

    Free

  • Credit bureaus monitored

    Experian

  • Credit scoring model used

    FICO®

  • Dark web scan

    Yes, one-time only

  • Identity insurance

    No

Terms apply.

Correction: This article's headline has been updated to state that nearly a million jobs were added in July. It has also been updated to correctly state that 943,000 jobs were added in July.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.