Will Employers Dig into Your Credit Report Before Offering You a Job?

13-Feb-2019 written by : FSI-Team

Credit Report Before Offering You a Job?

Your credit report plays a big role when you apply for loans and other forms of credit. For instance, if your score is low, then you may not get standard interest rates on home loans, personal loans, etc. You may not even qualify for a loan in the first place if your score is too bad. However, does your credit report also affect your employment opportunities? Do employers check the credit reports of the candidates they interview for jobs? Let’s find out.

Do Employers Check Credit Reports of Job Applicants?

In developed nations like the US and the UK, the system of credit rating is quite common. This is the reason why a large number of organizations and institutes like banks, insurance companies, etc. check the credit score of different individuals before finalizing the interest rate of loans and credit cards, or the cost of the premium. Many of the top organizations also check the credit rating of the job applicants during recruitment.

In India, the importance of credit rating has increased a lot today and most banks and other financial institutions do check the cibil report of the customers. However, now they have started factoring in the same when seeking applications for available jobs as well. For instance, in 2016, India’s largest lender SBI set up eligibility criteria that barred individuals who had a history of loan default from appearing for the qualifying examination.

SBI may have openly declared where it stands with the recruitment process, but there are many other financial institutions and even non-financial institutions that conduct background checks on the job applicants which may include the assessment of credit reports. This means you do have a strong reason to check your free cibil report if you haven’t checked it in a long time.

What do the Employers Check in a Credit Report?

The following are some of the major things that an employer is likely to check in your report:

Your Personality

Believe it or not, your credit report can tell a lot about your personality. For instance, if your report shows that you often max out your credit cards, then it could suggest that you don’t know how to manage your credit properly or are often running out of money. Similarly, if there are records of many late payments, then it could suggest that you lack discipline and responsibility. All these elements are unlikely to sit well with any employer, which is why you must keep them in check.

History of Loan Defaulting

Defaulting on a loan is a serious offense. Not only it greatly hurts your credit score, but it can also destroy some of the best job opportunities that you can get in your life. This is especially the case if you are working in the banking sector as they take loan defaults very seriously.

Verification of Credentials

Your credit report contains all your personal details including your name, contact number, and email address, residential address, bank account details, etc. Thus, an employer can cross-check your documents with the credit report to make sure that you are a genuine job applicant who hasn’t fudged their personal details.

What Can You do to Improve Your Credit Report?

If you checked your free cibil report and saw that your score is poor, then you can take the following measures to give it a boost:

  • Make sure that you pay your credit card bills and loan EMIs on time every month. Even a single late EMI can hurt your score.
  • Don’t apply for loans at multiple banks at the same time as it leads to too many inquiries that are shown in your report. Instead, wait for a few days whenever you send a loan application.
  • Check your credit report every 2 months or so. If you find any errors in the records and personal details, then have them corrected by contacting your bank.
  • Use your credit cards responsibly. Keep the credit utilization ratio below 30%.

Gone are the days when credit reports were only used by banks during the evaluation of loan applications. Today, you need a healthy credit report for a variety of things, including jobs. So, make sure that you develop good credit habits and take care of your credit score.



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