Employers Use Credit Reports to Hire and Fire

Job seekers today are discovering that employers are interested in a lot more than their résumés. Many companies routinely check credit reports on current and prospective employees. Whether you’re a new hire or 20-year veteran, your employer may check your credit history.

This screening practice is growing due to the increased security concerns companies face. Employers generally check credit histories of those applying for management and executive positions, as well as those who will have access to cash, assets, a company credit card, or confidential information. More companies check backgrounds because the reports are easy to get and relatively inexpensive.

Employers obtain your credit report by paying a fee to a consumer reporting agency or employment background check agency. They use the information to verify your identity and employment history. Some employers also look at how much you owe on loans and other debts and whether you’ve been late on payments, had accounts sent to collection, or declared bankruptcy. They use these as indicators of your ability to manage your affairs and see how the salary will match up against your monthly payments.

While this practice is perfectly legal, you should be aware of your rights. Some observers have raised concerns about fairness in the hiring process. The Fair Credit Reporting Act (FCRA) and state laws regulate how employers get and use your information. Employers must notify you they’ll be checking your credit report and wait for your written permission. You may elect to refuse a credit check, but it could cost you the job.

Employers can use credit problems such as defaults or collections actions against you in the hiring process. However, before they eliminate you as a job candidate or fire you because of your credit report, they must give you a pre-adverse action disclosure. After they give you a copy of your credit report and a written summary of your rights under FCRA, they also must give you an adverse action notice that explains why you’re no longer being considered. You also should receive the name and contact information for the agency that provided your report, so you can dispute inaccurate information.

An employer cannot use bankruptcy as a reason not to hire or promote an employee, according to the Federal Bankruptcy Act. In compliance with state and federal laws, employers cannot violate discrimination laws in any aspect of employment, including hiring.

Get a copy of your credit report before you interview to avoid any surprises. The Fair and Accurate Credit Transactions Act (FACTA) now requires the three nationwide consumer reporting agencies–Equifax, Experian, and TransUnion—to provide consumers with a free copy of their credit report every year (annualcreditreport.com). If you think a company violated the FCRA, contact the Federal Trade Commission at http://www.ftc.gov or by calling 877-FTC-HELP.

And remember that the people at your credit union are here to help you build and protect your credit record, by offering loans at fair rates and counseling if needed.

Big Money Questions Before Marriage

No matter how well you and your significant other jibed while dating, marriage brings new things to think about—and money is one of them. Ironing out any potential sources of friction makes for a happier couple. Get the conversation rolling and ask these questions before marriage:

What do you earn?
No one should be in the dark about his or her partner’s income, even if, at first, bringing it up feels awkward. Income level affects everything from day-to-day lifestyle to your future tax bracket.

What’s your credit history?
If your spouse doesn’t have a great credit score or has a lot of debt, you may not qualify for a good interest rate on your mortgage. Though it can be tough to talk about, financial secrets cause many more problems than less-than-perfect credit.

What is your debt picture?
Debt affects everything from monthly bills to long-term savings. Be respectful with each other when discussing student loans, credit cards, or loans from family. If the financial inventory uncovers debts or other financial challenges, figure out how to tackle the issues together.

Are spending and saving priorities in line?
Talk about how you’ll handle major purchases such as appliances and vacations, as well as regular expenses such as groceries and utilities. Discuss what amount of money is OK for one person to spend without consulting the other. Talk about your values around saving money.

Who will handle your budget and bills?
Talk about how the two of you are going to divide household finances. Talk about whether you’ll have individual or joint Hopewell Federal Credit Union accounts—or both.

What are your future plans?
How would you feel if your future spouse planned to stop working to pursue an expensive graduate degree or volunteer opportunity? It’s important to also discuss whether both of you will continue to work if you have children.

The professionals at Hopewell Federal can help you and your partner get on the same page for your new life together. Stop by or call today at Hopewell Federal Credit Union.

Millennials: Timely Credit Card Payments Are Crucial

Between juggling student loan payments, rent, and other bills, you might be tempted to skip a credit card payment. Don’t do it. Missing a payment can lower your credit score, which can lead to difficulty getting a loan or even a job.

Millennials, young adults ages 19 to 29, actually have the fewest number of credit cards and the lowest average balance on them, according to Experian’s annual state of credit report. But, they also have the lowest credit scores and frequently make late payments on their cards.

The average overall credit score in Experian’s report is 681; the average for millennials is 628. Shorter credit histories and high utilization rates are two factors that account for the low scores.

To learn more about your credit score and give it a boost, understand:

* What makes up a credit score—Payment history, amounts owed (especially as a percentage of credit available–the utilization factor), length of credit history, new credit, and types of credit in use determine your credit score.

* How to get your credit report—You can request one free credit report a year from each of the three major credit reporting bureaus by visiting annualcreditreport.com, the only website authorized to provide these free reports. You also can call 877-322-8228 or complete the Annual Credit Report Request Form and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA, 30348-5281.

* How to improve your credit score—Pay all bills on time, every time. Also consider using a secured credit card. A secured card trades access to credit for your commitment to keep a certain amount of money in a savings account. The professionals at Hopewell Federal Credit Union can set you up with a secured card. Stop by or call today at 740.522.8311.