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.
• Employer are allowed to check your credit in Canada.
• 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?

Employers are legally permitted to check a prospective employee’s credit report as part of the hiring process in Canada. Depending on the type of job, a credit check may actually be a requirement. For instance, government jobs in Canada typically require a credit check.

That said, employers are still required to obtain your consent before they pull your credit file. 

Will An Employer Credit Check Hurt My Credit?

When an employer pulls your credit file, it’s usually considered as a ‘soft inquiry’, which does not affect your credit score. Only hard inquiries may pull down your credit score slightly, which occurs when you’re applying for new credit.  

What Type Of Jobs Require A Credit Check? 

Not all job types require a credit check, however some jobs, typically ones that require you to handle money, might require one. Government jobs, bank jobs such as financial advisors and accounts may require a credit check. Similarly, lawyers and jobs in law enforcement may also require one. 

Why Do Employers Perform Credit Checks?

Your employer may do a credit check in order to check 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 – If you’re applying for a job that involves the management of the company’s finances, your employer may use your credit report to see how you’ve managed your own credit accounts.
• 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 forgetful, unable to meet deadlines, or don’t have a strong sense of accountability.
• Trustworthy – If your position is directly involved with the company’s finances, your employer may want to ensure that you won’t engage in any criminal activities. If you’re struggling with bankruptcy or other financial hardships, you may be more likely to engage in fraud or theft.

What Information Can An Employer See During A Credit Check?

Soft credit inquiries provide a basic snapshot of your financial history and don’t include all your financial information. 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 the accounts you’ve opened, when you’ve opened them, the total amount you owe, and credit limit overages.
• 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

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 possible employees. 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.

Verify Information

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.

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, feel free to 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.

How To 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. 

• Look Into Any 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.
• Boost Your Credit Score – If you find that your credit score is a little on the low side after checking your file, you may want to take steps to improve it before applying for a job by doing the following:

• Make on-time payments on all bills
• Reduce your debt-to-credit ratio
• Keep your credit card balances low
• Limit the number of hard inquiries on your credit report
• Keep tabs on your credit report and dispute mistakes

Additional Reading

Do You Need To Provide Your SIN For A Credit Check?

Can A Landlord Check Your Credit 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 On Credit Checks By Employers