Having Your Credit Checked For a Job in Canada

You’ve definitely heard of creditors and lenders checking your credit report, but did you know that potential employers sometimes check credit reports too? Usually checking a credit report is a part of a full employment background check which includes things such as a criminal record check as well. Because this may be new information to you, it’s important to understand what a potential employer will see through a credit check and why they might want to look at the credit report of a potential employee.

These 7 people can check your credit.

What Information is Stored in My Credit Report?

There is a lot of information contained in your credit report, however, potential employers are concerned with specific details that other users of your credit report may not consider. The information below is stored in your credit report and is available to anyone who checks your credit report.

When accounts were opened
Total amount you owe
If you’ve missed any payments
If you’ve made payments on time
Credit limit overages
Bad cheques or non-sufficient fund cheques
Credit available to you, such as credit cards, lines of credit and loans
Bankruptcy or court decisions against you in relation to credit
Personal information that’s available in public records
Inquiries from creditors and other persons who have requested to view your credit report within the last three years
Debt currently with collection agencies
Closed chequing and savings accounts “for cause” due to owed money or committed fraud
Comments including consumer statements, fraud alerts, and identity verification alerts
Registered items, for example, a lien on a car which allows the creditor to seize it if you cease to make payments

Example Credit Report

Wondering which credit bureau lenders will check in Canada? Find out here.

Why do Employers Perform Background Checks?

Employers perform background checks for a wide variety of reasons, but mainly it is to determine if you’re the right person to do the job they’re hiring for. Also, employers performing background checks want to verify factually that you’re right for the job, as opposed to taking your word for it.

Criminal Record. An employer may want to check for any criminal offenses committed by possible employees. This is particularly common for employees that will be working with sensitive populations such as within healthcare and childcare industries.
Eligibility to Work. Your legal eligibility to work in a country may be a concern for employers. Things they will be looking for is your citizenship status or legal work visas.
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 claimed to have worked.
Health Requirements. Certain employers have health requirements for employees and they will want to verify that you’re not violating them. As an example, you can’t have any serious, contagious illnesses if you’re working as a nurse.
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.
Financial History. For some jobs, your financial history an important factor to consider. This is common for any jobs that require the employee to work with money.

Read this to learn about the documents you need to find a job in Canada.

Why Would an Employer Want to See Your Credit History?

Credit checks for employment have become increasingly popular in Canada in recent years. If you work in the financial sector, definitely expect to have a credit check performed on you. The financial sector includes industries such as banking, insurance, finance, and accounting. Essentially, any job that involves money will involve consideration of an employee’s financial capabilities, which is why an employer may do a credit check.

Be sure to get your own credit report and check these 4 things right now.

The federal government recently passed a law that credit checks are mandatory for anyone working as a government official or servant. If that’s you, you can absolutely expect a credit check. This law was passed because excessive indebtedness may give an individual an incentive to commit unethical acts.

Can an Employer Deny Me a Job Because of My Credit History?

While it seems unfair, the answer is yes, an employer can deny you a job because of your credit history. However, keep in mind that not all employers do credit checks, they are only common in the financial sector and government. In addition, employers can’t check your credit without your consent, make sure you read everything you sign so you’ll know if a credit check will be performed.

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 offenses, or suspended criminal offenses. Part of background checks will reveal 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. Unfortunately, credit history is not on the list above which means that an employer can deny you a job based on your credit history.

Is it better to have a bad credit history or none at all? Click here to know.

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.

That being said, you really have to go with your gut. Sometimes being honest is the best policy, but other times it may not be wise to disclose your credit issues. Many employers may even gloss over your history and never bring it up with you, credit checks are only important in certain industries as we discussed above. Regardless, it’s a good idea to be familiar with what’s included in your credit history before applying for jobs to ensure you’re ready for whatever they may find and comment on.

Canadian Credit Score Check out this infographic to learn about how your credit score is calculated.

Consider Employer’s Policies Before Agreeing to Background Check

Before agreeing to a background check, feel free to ask your potential employer about the specifics of their background checks. 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?

On the other hand, there are certain things a potential employer may ask for that you shouldn’t disclose. Below are items and scenarios that you should avoid.

If an employer asks for your social media passwords, do not disclose the information. Asking for this information is not technically illegal, but it is very unethical and is an invasion of privacy.
Some companies have had a history of data breaches. If this is the case with the employer you’re applying to, be wary of providing personal information as it could be leaked.
Avoid employers that are careless when it comes to personal information and background checks. This can be challenging to detect in the hiring process, a good idea is to do some research ahead of time by checking job forums and other websites that provide insight on what it’s like to work for different companies.
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.

Moving to a new place? This is why your landlord might check your credit.

Final Thoughts

Credit checks are not only a reality with lenders, but it is also a reality with certain employers. While applying and interviewing for jobs, consider what employers will see in your credit report and be sure to fully understand the background check process of your potential employer. Other than that, happy job hunting!