CREDIT CHECKS

One consumer struggles to build credit without dinging her credit score and Credit Karma gives some honest recommendations:

By Casey Bond

By now, you’re probably well aware of how important your credit score is to your financial well-being and you do your best to carefully dodge all the potential threats to that precious number. Late payments, hard credit inquiries–you avoid them like the plague. It can be exhausting keeping up with it all, so is there anything at all that doesn’t affect your credit score or is every detail of your financial life fated to influence your credit in some way?

This is a guest post by Mr Credit Cards from www.askmrcreditcard.com.

We all know that your credit score is used to determine if you get accepted for a credit card. Did you know that it has ramifications far beyond mere credit cards?

Have you ever applied for a job only to discover later that the company ran a credit check on you, which may or may not have affected you being hired? If this has happened to you, you are not alone. Many companies are now taking it upon themselves to check your credit as a screening tool to determine whether you’re a desirable employee. But how in the world are they doing it?

How Employers Are Checking Your Credit

The FICO(R) 8 Score, according to FICO, is becoming a popular choice for consumer credit risk assessment among banks and financial institutions. Being used by over 2,500 so far, this score is a way to determine the risk involved in taking on a customer.

A recent report from a major U.S. bankcard issuer says its use has helped it produce more profits because it has taken on fewer risky customers who are likely to default with car financing, credit cards and more. As a borrower, this means it’s good to learn more about the new FICO credit score to understand how it affects your personal credit score and opportunities for financing (Market Watch).

If someone has ever requested to pull your credit report, it’s likely that you were told that it would be a hard check or soft check, leaving you to wonder what the difference is between the two. There is a difference and it is something that should be understood before you allow someone to check your credit at all. To help you differentiate, let’s look more closely at what they are and how they can affect your credit report or credit score.

Hard Credit Check Versus Soft Credit Check

A survey released by the Society for Human Resource Management found that an increasing number of employers are using credit checks to screen job applicants. Unfortunately, the credit checks are resulting in a larger number of applicants being turned down for jobs thanks to a missed payment on a mortgage loan, auto loan or credit card.

According to the survey, 60 percent of employers were using credit checks. This represents a significant increase over the 35 percent reported in 2003. With so many people suffering through the residuals of the Great Recession, experts believe employers’ timing for the use of this screening technique couldn’t be worse (CNN Money).

The economic recession has caused millions of people to lose their jobs. With historic unemployment numbers crippling the nation, the fact is that finding a job is tougher then usual. Not only do candidates need to ensure that their resume is flawless and their interview skills are dazzling, job seekers may also need to ensure the health of their credit history.

Credit Checks and Employers

Many people have a problem with spending too much money. Let’s face it, it’s fun to possess all those bright, shiny things we see for sale out there, whether it’s a brand new BMW convertible or a suede jacket you just have to have. Temptations are everywhere, right? Unfortunately, these temptations seduce many people into living beyond their means – way beyond. The result is debt, serious financial problems and misery, and a thoroughly bruised and battered credit report that prevent them from borrowing money ever again – no matter how badly they need it. Many people with credit card debt (or debts incurred through other ways and reasons) know that the picture is dire, but just can’t bring themselves to check their credit status. This is what the experts call “willful denial,” and it’s guaranteed to make everything worse.

If you’ve incurred an embarrassing trail of bad debts, then you know in your heart of hearts that your credit report is going to be painful to see. For this reason you’re probably extremely resistant to even finding out what it is, let alone begin the process of repairing your bad credit report. You imagine what it must detail and you get so worked up about it, that psychologically it’s just easier to bury the idea completely. Many people are haunted by the concept of their credit report, year after year after year; simply because the thought of it terrifies them – but somehow they think it’s easier to live that way than deal with it and their fears. However, the irony is that in many many cases, your credit report may not be as bad as you think – after all, you’ve never looked at it, right? Additionally, by going over it, you may find that half its problems are easily fixable – and as soon as you fix them your credit report score goes up. So start taking the smart steps to repairing your credit.

The practice of employers checking job applicants’ credit before agreeing to hire them for a position is becoming more common than ever – and in many cases, is abusive. So why is it happening? Why are employers taking it upon themselves to check your credit as a way to decide whether they want to hire you? We’ll take a look at this concept, as well as ways that you can protect yourself from this happening to you.

Why are Employers are Checking Your Credit Reports?