What Is A Credit Check For A Job?

While it’s common for creditors and lenders to check your credit report, did you know that potential employers sometimes check credit reports too? Employers may perform a credit check as part of a full employment background check.

It’s important to understand what a potential employer will see through a credit inquiry and what they may be looking for in the credit report of a potential employee.

Key Points

• Prospective employers may check your credit file to make sure that you’re financially responsible and organized, which may be key traits for the job you’re applying for.
• Certain types of jobs may prompt an employer to check your credit, such as positions in government, banks, and law enforcement.
• When an employer checks your credit report, it shouldn’t have any effect on your credit score.

What Is A Credit Check For A Job?

As part of the application process, a prospective employer may choose to conduct a credit check to confirm your identity and financial profile to determine whether to hire you. Your credit file can provide employers with an accurate overview of how you manage your financial responsibilities.

Is It Legal For An Employer To Check My Credit For A Job?

Yes, employers in Canada can legally check a job applicant’s credit report as part of the hiring process. In fact, a credit check may be a requirement depending on the job type. For instance, government jobs usually require a credit check.

That said, employers must still obtain your consent before they pull your credit file. 

Will An Employer Credit Check Have A Negative Effect On My Credit?

No, your credit score should not be affected. When an employer pulls your credit file, it’s usually a ‘soft inquiry’, which does not impact your credit score. Only hard inquiries may pull down your credit score slightly, which occurs when you’re applying for new credit.  

Learn more: Soft vs. Hard Credit Check In Canada

What Type Of Jobs Require A Credit Check? 

Not all job types involve a credit check. That said, some jobs — typically ones that require you to handle money — may require one. Government jobs and banking professionals may have their credit scores checked. Similarly, lawyers and those in law enforcement may also need one. 

Why Do Employers Conduct Credit Checks?

Your employer may conduct a credit inquiry to verify your financial history. This is typically common for jobs that require the employee to work with money. Employers will use the credit check to see if you are: 

• Financially Responsible: A job that requires you to manage finances may involve a credit check so the employer can determine your own financial behaviour.
• Organized: An employer may check your bill payment history to see if you’re organized. If you have a lot of missed or late payments, it may indicate that you are not accountable for your financial actions.
• Trustworthy: If your position involves the company’s finances, your employer may want to make sure you won’t participate in criminal activities. If you’re dealing with financial issues, you’ll be more likely to take part in fraud or theft.

What Information Do Employers See On A Credit Check?

Soft credit inquiries provide a basic picture of your financial profile and don’t include all your financial details. Potential employers are more concerned with specific details that other users of your credit report may not consider.

Below is the information employers may be able to see when they do a credit check: 

• Payment History: Your history of both on-time and missed payments will be noted on your credit report and visible to those who pull your credit file.
• Credit History: Your credit history is made up of information such as your accounts, the amount owed, and credit utilization.
• Credit Checks: Inquiries from creditors and other persons who have requested to view your credit report within the last 3 to 6 years may be listed on your file.
• Public Records: This information includes bankruptcies, consumer proposals, liens, and accounts in collections.

However, if you have a history of missed payments, your credit report won’t show an employer the reasons behind these missed payments or any accumulation of debt.

Example Of A Credit Report

The following is a sample credit report:

Learn more: How To Read Your Credit Report

Can I Get Denied For A Job Because Of My Credit?

While it seems unfair, the answer is yes, you can have a job offer rescinded after a credit check. If you have poor credit as a result of irresponsible management of your finances, this could paint the picture of an unreliable employee in the eyes of a prospective employer.

However, keep in mind that not all employers do credit checks. They are more common in the financial sector and within the government.

What Can You Do If You Have Bad Credit And Your Employer Wants to Check It?

If you’ve had credit issues in the past, you can communicate your credit history to your employer to make the best of the situation. 

In the interview, admit to your potential employer that you’ve had credit issues and do your best to explain that it was a temporary, yet challenging, period from your past. Also, explain that you’ve been working hard to ensure a clean history and are moving forward from the issues you had.

What Else Do Employers Check For A Job?

Some employers may conduct background checks on job applicants. Part of background checks will reveal the personal information of a potential employee. It’s important to know what they can and cannot consider when determining if you’re the right candidate for a job. 

Here are some other things employers may check as part of your background check: 

Criminal Record

An employer may want to check for any criminal offences committed by potential job candidates. This is particularly common for employees who will be working with sensitive populations, such as within the healthcare and childcare industries.

Eligibility To Work

Your legal eligibility to work in Canada may be a concern for employers. Your citizenship status or legal work visas may be verified to ensure you’re legally allowed to work in Canada.

Information Verification

Employers do a background check to verify that the information you provided on an application and in interviews is valid. More specifically, an employer may want to verify the school you claim to have attended and the jobs you have worked.

Learn more: Documents Needed to Find a Job in Canada

Health Requirements

Certain employers have health requirements for employees, such as police officers, firefighters, truck drivers, and healthcare workers.

Right Fit

Employers may perform a background check to gain a better understanding of your skills, work history, work habits, and personality, among many other things, to determine if you’re the right fit for the job.

Best Job Boards To Find A Job

There are several online job boards that list positions available to be filled. Here are some of the more reputable ones to use to help you find your next job:

Tips When Applying For A Job

When applying for a job, it’s best to be informed and keep the following things in mind: 

Review An Employer’s Policies Before Agreeing To A Background Check

Before agreeing to a background check, ask your potential employer about the specifics of their investigations. Below are common, useful questions to ask your employer before the background check process begins:

• What information will be reviewed as a part of the background check?
• What kind of crimes might reflect poorly on a potential employee for this job?
• Will my social media or internet presence be scrutinized as a part of the background check?
• How much weight is placed on expunged or sealed records?
• How far back will the background check go?
• Does the background check include an analysis of financial history?
• If financial history is considered, what do you look for specifically?

Watch Out For Inappropriate Requests From A Potential Employer 

There are certain things a potential employer may ask for that you shouldn’t disclose. Below are items and scenarios that you should avoid providing:

• Social Media Passwords: If an employer asks for your social media passwords, do not disclose this information. While asking for this information is not technically illegal, it’s unethical and an invasion of privacy.
• Certain Personal Information: When you’re in the job application phase, you should keep certain pieces of personal information private, such as your Social Insurance Number (SIN), your date of birth, and your marital status. Only after you’ve been hired will you be able to provide more comprehensive information to your employer as part of the onboarding process.
• Private Health Records: Finally, avoid employers that ask for private health records. This is illegal in most countries and cannot be used to determine your eligibility for a job in the majority of cases.

Watch Out For Discrimination During Job Application

The Canadian Human Rights Act provides detailed information regarding the interaction of human rights and employment practices. As per the Act, an individual cannot be discriminated against because of their:

• Race
• National or ethnic origin
• Religion
• Sex
• Sexual orientation
• Age
• Family status
• Marital status
• Disability
• Pardoned criminal offences
• Suspended criminal offences

Learn more: Do Temporary Foreign Workers Have The Same Rights As Canadian Workers?

How Do I Prepare For An Employment Credit Check?

When you apply for a job and the employer checks your credit file, the last thing you want is to find out that a poor credit score is what’s preventing you from getting hired. 

Before you apply for a job that may require a credit check, consider checking your credit report to ensure that it’s healthy. If you have bad credit, be sure to try and improve your credit before applying for the job. 

How To Improve Your Credit Score

To give your credit score a boost, try these tips:

• Check Your Credit Report For Inaccuracies: It’s possible for there to be mistakes on your credit file that may be unfairly pulling your credit score down. If you notice any errors, report them immediately to the credit bureau and have them fixed.

• Make On-Time Bill Payments: Payment history plays the biggest role in your credit score. Always pay your bills on time each billing cycle.
• Reduce Your Debt-To-Credit Ratio: Keeping your DTI ratio under 32% can help improve your credit score. So, try your best to pay down your debt.
• Reduce Your Credit Utilization: Keep your credit card balances low to reduce your credit utilization ratio.
• Don’t Apply For Too Many Loans: Limit the number of hard inquiries on your credit report by avoiding too many loan applications in a short window.

Learn more: How To Improve Your Credit Scores

Where Can I Check My Credit Score?

You may want to see what employers are seeing when they pull your credit report and check your score. Fortunately, checking your credit score is easy, and can be done with the following sources:

Learn more: How To Get A Free Credit Report In Canada

How Long Does A Credit Check Stay On Your Credit Report?

How long a credit check stays on your report depends on the type of inquiry and the credit bureau:

• Hard Credit Checks: Hard inquiries may remain on your Equifax credit file for as long as 3 years, while TransUnion can retain them on your Consumer Disclosure for up to 7 years.
• Soft Credit Checks: Soft inquiries, on the other hand, are only visible to you and do not appear when others access your credit report.

Additional Reading

The Best Paying Jobs With The Government: No Degree Required

FSWEP and Student Jobs: How To Work For The Federal Public Service

Best Work From Home Jobs In Canada

Final Thoughts

Credit checks are not only conducted by lenders, but they may also be required by certain employers. While applying and interviewing for jobs, consider what information prospective employers will see on your credit report and be sure to fully understand the background check process.

FAQs