Typical situation in the land of job hunting: You’ve managed to create a résumé that made recruiters drool. You’ve successfully run the obstacle course of video screenings and in-person interviews. Then, a recruiter tells you that the company will be doing a background check. No wild past–whew!–so you think you’re in the clear. But next you think about the thousands of dollars in student loans you have (not to mention that maxed out Nordstrom card). Uh-oh. So here’s the million-dollar question: Can HR recruiters actually see my credit score–and can they reject my application based on my financial situation?
Before you have a midday meltdown, we did some digging.
“It sounds like this is Big Brother, but yes, it is indeed true,” says Herbert Moore, co-founder and co-CEO of WiseBanyan.com. “Not only can they can see if you have had any bankruptcies in the past, but they can also see any outstanding balances on credit cards and student loans. Finally, they can see if any of these loans are past due.” And, yes, this is all legal!
For those of us with student loan debt, don’t panic. “Though it sounds paradoxical, student loan debt can positively impact your credit score,” says Moore. “Further, on-time payment of student loan debt can show good payment history and creditworthiness.”
A study by the Society for Human Resource Management (SHRM) showed that 60% of employers pull current and potential employees’ credit reports.
Companies pull credit reports in order to determine how financially stable you are. That means whether you’re toting a Birkin or a backpack, employers want to make sure you won’t raid the company petty cash trying to pay off your iPhone bill.
Legally, your employer has to ask your permission and get written consent to check your credit report. Plus, if you are turned down for the job based on what is in your credit report, you must be provided with a copy of that report and given a reason. Oh, and heads up MBAers and bankers, Moore says applicants to the financial sector are the most likely to be rejected for a low credit score or spotted credit report.
Just remember, knowledge is power. Request your credit report at least twice a year. Check that there’s nothing on there that should not be, and if you spot something, report it. Fraud is a sure summer buzz kill.
This article originally appeared on Levo and is reprinted with permission.