What to Know About Credit Checks for Employment

An employment credit check reviews your financial behaviors — like debts and payment history — to assess job suitability. Federal and state laws require your consent and notification if it affects hiring decisions.

By Nathan Paulus

Edited by Victoria Copans

Updated: November 1, 2024

Advertising & Editorial Disclosure

An HR specialist and a candidate in a job interview.

Employers often look beyond your resume and interview to understand who you are as a candidate, and sometimes that means checking your credit report. An employment credit check can be a crucial part of the hiring process for roles that require trust, financial responsibility or access to sensitive information.

From understanding the details that employers can and cannot see to the state-specific regulations that might protect you, we’ll break down everything you need to know about employment credit checks to help you stay prepared when starting a new career. We’ll also share practical strategies to strengthen your credit profile and confidently navigate the hiring process.

Key Takeaways: Employment Credit Checks

Employers use credit checks to evaluate your financial behavior — including payment history and outstanding debts — most often for roles that require high levels of trust and responsibility.

Federal and state laws require employers to obtain your consent before conducting a credit check and to notify you if it impacts their hiring decision.

Prepare for an employment credit check by reviewing your credit report, disputing any errors and managing your debts to present a strong financial profile.

What Is a Pre-Employment Credit Check?

An employment credit check allows employers to review candidates' credit reports to understand their financial behavior. Unlike a credit check by a lender, it does not evaluate your ability to borrow money; it provides a view of how well you manage your financial obligations. Employers look for indicators of financial stability or potential concerns — such as unpaid debts or a pattern of missed payments — to gauge a person’s reliability and responsibility.

Although lenders and employers both access your credit report, their focus and the information they see differ. Employers do not view your credit score, and their inquiry is considered a "soft pull," which does not affect your credit rating. They are mainly interested in any signs of financial mismanagement that could pose a risk.

Pre-employment credit checks are more common in fields where trust is essential. They are often used for positions that involve managing finances, accessing sensitive data or making critical decisions. Common roles include:

Finance (financial analysts, accountants)
Government (federal employees, contractors)
Security (security personnel, cybersecurity experts)
Executive positions in various sectors

Main Reasons Employers Conduct Credit Checks

Employers check credit reports to evaluate a candidate’s trustworthiness and financial stability, particularly for roles with access to financial assets or confidential information. Reviewing financial histories helps them make informed hiring decisions that protect the organization from potential risks.

Security and Risk Mitigation

Credit checks are used to spot red flags that might suggest a candidate could pose a security threat, such as a history of financial mismanagement or unresolved debt issues. For roles involving access to funds or sensitive data, employers need assurance that financial pressures won’t tempt employees.

Verification of Identity and Background

Checking a credit report allows employers to confirm an applicant's identity and cross-check details like previous addresses or employment history. This step can help detect inconsistencies or potential fraud, ensuring that only credible candidates move forward in the hiring process.

Assessment of Financial Responsibility

Employers assess a candidate’s credit history to gauge how they handle their financial obligations, like paying bills on time or managing credit accounts wisely. A record of responsible financial behavior can suggest reliability and trustworthiness, traits that are especially valued in roles involving money management or high-stakes decision-making.

What Employers Can Access in a Credit Check

When employers check your credit, they gain access to specific details like the types of credit accounts you have, such as credit cards or loans, your payment history and any public records, like bankruptcies. These elements help them evaluate your financial responsibility, especially for positions that require a high level of trust.

Unlike lenders, employers do not have access to your full financial profile. They can't view your credit score, income or personal details, such as marital status or race. Their primary interest is understanding any potential financial risks rather than assessing your ability to repay debts.

What Employers Can See

Types of credit accounts (credit cards, loans)
Balances on accounts
Payment history (on-time, late payments)
Bankruptcies and other public financial records

What Employers Cannot See

Credit score
Income or salary details
Medical bills (unless in collections)
Personal information (e.g., marital status, race, religion)

When employers check your credit, it counts as a "soft inquiry," which does not affect your credit score. Understanding the difference between hard and soft credit inquiries is important — soft inquiries, like those by employers, are visible only to you and do not impact your credit rating. Meanwhile, hard inquiries, such as applying for new credit or loans, may lower your score.

Your Legal Rights and Protections in Employment Credit Checks

Federal and state laws protect your rights during employment credit checks, ensuring that employers follow proper procedures before accessing your financial information. Knowing these rights helps safeguard your personal data and address any issues that might arise.

FCRA Protections

The Fair Credit Reporting Act (FCRA) provides specific rights for job applicants when employers conduct credit checks. Before accessing your credit report, employers must obtain your written permission, allowing you to be fully informed and agree to this part of the hiring process.

If an employer chooses not to hire you based on information found in your credit report, they must inform you and provide a copy of the report used. This allows you to review the details influencing their decision and dispute any errors directly with the credit bureau to correct inaccuracies and protect your credit standing.

State-Specific Regulations in Employment Credit Checks

Many cities and states have implemented laws that restrict or ban employment credit checks to protect applicants from potential discrimination. These regulations vary, so be sure to check your local laws:

Location	Regulation
California	California law limits credit checks to roles like managerial positions, law enforcement or jobs in financial institutions. Enacted in 2012, these restrictions also cover positions involving access to confidential information or large sums of money.
New York City	The Stop Credit Discrimination in Employment Act bans credit checks for most jobs, but exceptions include police officers, those handling substantial financial responsibilities and positions requiring national security clearance.
Chicago	Chicago’s Human Rights Ordinance restricts credit checks to specific roles, such as those handling large amounts of cash or assets. Jobs in the financial sector or where a background check is mandated by federal law are also exempt.
Philadelphia	Philadelphia’s Fair Practices Ordinance generally prohibits credit checks but allows exceptions for positions like CFOs or other roles requiring bonding or that involve handling sensitive company information.
Colorado	Since 2013, Colorado law has permitted credit checks only if the employer can demonstrate that they are substantially related to the job. Positions like financial controllers or those with fiduciary duties are commonly exempted.
Connecticut	Connecticut’s Public Act No. 11-223 restricts credit checks to positions that require access to confidential financial information or where federal or state law mandates it, such as certain state government roles.
Hawaii	The Hawaiʻi Employment Practices Act prohibits most credit checks except for managerial roles or positions that involve significant financial responsibilities, such as accountants or financial managers, effective since 2009.
Illinois	Under the Illinois Employee Credit Privacy Act, credit checks are banned for most jobs, with exceptions for roles in banking, insurance, debt collection, and positions requiring bonding or government security clearance.
Maryland	Maryland’s Job Applicant Fairness Act allows credit checks only for jobs involving financial transactions, managerial duties or access to sensitive information, such as accountants or IT personnel handling protected data.
Nevada	Nevada law permits credit checks primarily for roles where the employer can prove they are job-related, such as employees of licensed gaming establishments or those handling cash or financial records.
Oregon	Oregon law, effective since 2010, allows credit checks only for managerial roles, jobs with fiduciary duties or where mandated by law, such as certain positions within state and local government.
Vermont	Vermont’s Fair Employment Practices Act generally prohibits credit checks but makes exceptions for jobs involving access to sensitive financial information or state-required background checks, like those in state agencies.
Washington, D.C.	The Fair Credit in Employment Amendment Act in Washington, D.C., has been in effect since 2013. It limits credit checks to roles where financial responsibilities are clearly outlined, such as finance managers or positions involving trade secrets.

To ensure compliance with these regulations, review specific state and local laws or consult resources such as the National Conference of State Legislatures (NCSL) or your state's labor department website.

How Far Back Employment Credit Checks Go

Most credit checks for employment consider financial history from the past seven to 10 years, allowing employers to assess recent financial behavior like payment history and account management. For some roles, particularly those with substantial financial responsibilities, a deeper look into older records may be required to identify any past issues.

The length of time specific financial information stays on your credit report can differ. Bankruptcies may be listed for up to 10 years, while other negative marks — such as late payments or collections — usually remain for seven years.

5 Ways to Prepare for an Employment Credit Check

Preparing for a credit check can help you feel more confident during the hiring process. Taking proactive steps to review and strengthen your credit report can give you an advantage if an employer decides to examine your financial history.

1
Get Your Free Credit Report
Start by obtaining a free copy of your credit report from each of the three major bureaus — Experian, Equifax and TransUnion — through AnnualCreditReport.com. Carefully review each report for any discrepancies or errors that could affect your credit standing. Check your report regularly to spot issues early and correct them before they impact a potential job opportunity.
2
Spot and Dispute Errors
Look closely for mistakes like incorrect addresses, duplicated accounts or inaccurate payment histories. If you find an error on your credit report, visit the Federal Trade Commission's guide to disputing errors for detailed steps. You’ll need to collect supporting documents, draft a dispute letter and send it to both the credit bureau and the organization that reported the incorrect information.
3
Pay Down Debt
Prioritize paying off high-interest debts first, such as credit card balances, to reduce your overall debt load and improve your credit utilization rate. Keeping your credit balances low relative to your available credit limits demonstrates responsible financial management, which may positively influence an employer's perception of you.
4
Hold Off on New Credit Applications
Avoid applying for new credit cards, loans or other forms of credit while you’re actively searching for a job. New credit applications can lead to hard inquiries on your report, which might raise concerns for potential employers about your financial stability or need for additional credit.
5
Prepare Explanations for Negative Marks
If your credit report shows any negative marks — such as late payments due to unforeseen circumstances like a job loss or medical emergency — be ready to provide a brief, honest explanation. Employers may appreciate the transparency and context you provide, which can help mitigate concerns about your financial reliability.

BEST RESOURCES TO KEEP YOUR CREDIT IN CHECK

MyFICO: Get your official FICO score and explore tools that help you understand and improve your credit profile.
CreditWise by Capital One: Stay informed about changes to your credit report with free monitoring and real-time alerts.
Self’s Credit Builder: Build or enhance your credit score through small, manageable loans tailored to those with limited credit history.
GreenPath Financial Wellness: Access personalized credit counseling and debt management support from this trusted nonprofit.
Credit Karma: Monitor your credit for free, with regular updates and access to your credit reports.

FAQ About Employment Credit Checks

Being informed about employment credit checks can give you an edge as a job applicant. Here’s what you need to know if a credit check is part of the hiring process.

Why do employers check credit for employment?

Employers check credit reports to evaluate a candidate’s financial responsibility and trustworthiness, particularly for roles involving money management, access to sensitive data or positions where financial stability is crucial to job performance.

What does a credit check for employment show?

An employment credit check provides information such as your credit accounts, outstanding balances, payment history and public records, such as bankruptcies. It helps employers understand your financial habits without revealing your credit score.

Do employers check your credit score or just your credit report?

Employers generally check only your credit report and not your credit score, as they focus on your financial behaviors — like payment consistency and account management — rather than your eligibility for loans.

Can I refuse a credit check for employment?

You have the right to refuse a credit check, but it could affect your chances of being hired, especially for positions that require a high level of financial integrity or access to sensitive information.

About Nathan Paulus

Nathan Paulus is the Head of Content Marketing at MoneyGeek, with nearly 10 years of experience researching and creating content related to personal finance and financial literacy.

Paulus has a bachelor's degree in English from the University of St. Thomas, Houston. He enjoys helping people from all walks of life build stronger financial foundations.

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sources

City of Chicago. "Credit History Discrimination." Accessed November 1, 2024.
Colorado General Assembly. "Colorado Revised Statutes 2023." Accessed November 1, 2024.
Connecticut General Assembly. "Public Act No. 11-223." Accessed November 1, 2024.
Consumer Financial Protection Bureau. "Market Snapshot: Background Screening Reports." Accessed November 1, 2024.
District of Columbia Council. "D.C. Law 21-256. Fair Credit in Employment Amendment Act of 2016." Accessed November 1, 2024.
Federal Trade Commission. "Disputing Errors on Your Credit Reports." Accessed November 1, 2024.
Illinois General Assembly. "Public Act 096-1426." Accessed November 1, 2024.
Maryland General Assembly. "Labor and Employment." Accessed November 1, 2024.
National Consumer Law Center. "Past Imperfect: How Credit Scores and Other Analytics 'Bake In' and Perpetuate Past Discrimination." Accessed November 1, 2024.
Nevada Legislature. "Employment Practices." Accessed November 1, 2024.
Oregon State Legislature. "ORS 659A.320: Discrimination Based on Information in Credit History Prohibited." Accessed November 1, 2024.
Southeastern Pennsylvania Association for Rights and Advocacy. "Philadelphia Fair Practices Ordinance." Accessed November 1, 2024.
UCLA Labor Center. "New Laws on Credit Reports for Employment Purposes." Accessed November 1, 2024.
University of Hawaii, West Oʻahu. "Hawai’i Employment Practices Act." Accessed November 1, 2024.
Vermont General Assembly. "Title 21 : Labor." Accessed November 1, 2024.