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VOL. 39 | NO. 41 | Friday, October 9, 2015

Should credit scores really be used to screen new employees?

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The last time you applied for a job, you probably assumed your application and resume were the only things your future employer used to make a decision about whether or not to hire you.

Tennessee Rep. Steve Cohen and Massachusetts Sen. Elizabeth Warren have been working on a project that may change your mind on this idea.

Together, they co-authored an op-ed piece in Time describing why “It’s time to stop employer credit checks.” They’ve also introduced an “Equal Employment for All Act” in the U.S. House of Representatives.

You probably never realized it, but many employers are pulling your credit score before they hire you.

If your score doesn’t match up to what they’re looking for, you might just miss out on your next big career opportunity.

The argument an employer may make is that if a person can’t manage their own credit, how can they make decisions for the company?

On the surface, this argument seems to make sense.

Many executives manage millions of dollars every year. The ability to make quick, sound decisions that are long lasting is very important.

The problem with the argument comes into play when you look at the reality of how credit scores work – or don’t work.

If you pull yours every year, you’ll know what I’m talking about.

Inevitably, it has errors you need to correct.

For example, if you’ve ever had your financial identity stolen, it can be very difficult to get everything straightened out.

In addition to the errors consumers find in their credit reports, there a number of things included in the credit score they don’t always have control over.

Many people have poor credit scores due to being laid off and not having work for a long period of time.

Layoffs have become fairly commonplace as the economy has struggled over the years, and are often not a reflection on a job seeker’s talent.

When the housing market crashed, many homeowners felt forced to either foreclose or to participate in a short sale.

Those negative experiences also show up as dings on credit scores.

And, what about those pesky medical bills? Even when you pay your bills on time, you can occasionally receive a notice that you are delinquent. This can be due to the complexity of the medical system. Unfortunately, those mistakes can also show up on a credit report.

Negative information can potentially stay on your credit report for up to seven years. That means that even after you’ve done everything right, your past may follow you around – and keep you from landing your dream job.

As a consumer, the best thing you can do right now to protect your credit and future job prospects is this.

Each year, pull your credit report for free and review it. When you find errors, dispute them.

If you need help, ask those around you for help.

A clean credit score can not only help you chances of getting a job, but purchasing a house, and much more.

Angela Copeland is CEO and founder of Copeland Coaching and can be reached at CopelandCoaching.com.

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