Publication Date: November 06, 2010

By Channing Turner, The Arizona Republic.

Staying competitive in today’s job market increasingly means staying on top of your bills, as more companies now check job candidates’ credit history to gauge their personal responsibility.

And while many people question the practice, career experts say maintaining good credit is now a necessity.

“It’s a very common practice for employers to be conducting background checks, even in smaller businesses,” says Kevin Klimas, president and founder of Phoenix-based Clarifacts Inc., which specializes in background checks.

Generally, credit-reporting agencies produce credit reports so lenders, landlords and other service providers can gauge an applicant’s personal responsibility before they offer credit or a service. Employers use reports in much the same way, says Linda Baugh, president of Ace Executive Careers in Phoenix.

Employers routinely check applicants for positions that involve financial responsibility, bookkeeping or sensitive customer information such as credit-card accounts, Klimas says. But under Arizona law, employers may check credit simply to measure a candidate’s “overall responsibility level.”

That bothers Paul Stephens, director of policy and advocacy at Privacy Rights Clearinghouse, a consumer-advocacy organization in San Diego.

“Unemployment is high now, and there are a lot of individuals, through no fault of their own, who have fallen behind on their bills,” he says. “That certainly is no indication that the individual is irresponsible. Rather, it’s misfortune that affects them.”

Klimas counsels employers to consider a candidate’s circumstances and to view credit as just one indicator in their overall background.

“People with lack of income may be a little behind in their bills, but if they’re working with creditors . . . that’s something that a lot of times will show up,” he says.

– The law.

Under the Fair Credit Reporting Act, employers have the right to check a job applicant’s credit, but an employer must obtain permission before ordering a report. If the report causes an applicant to lose the job, the employer must show the report to the applicant and explain how to obtain a copy.

Once you get the job, employers have the right to periodically check credit for other employment purposes, such as promotion, retention or transfers. Once you give consent, your boss doesn’t need to ask again, Stephens says.

– What is reported.

The bulk of an employer’s credit report deals with credit history – paying your bills on time and any outstanding debts. It also lists creditors, the date an account opened, credit limit or amount of loan, and current balance.

Any closed or inactive account information stays on a report for seven to 11 years.

Credit scores are omitted, but bankruptcies remain in your history for 10 years.

– Improving your report.

Improving credit isn’t easy, Stephens says. He recommends that those considering employment obtain their credit report through a reporting agency and correct any inaccuracies immediately.

For those things you can’t change, Baugh recommends clearing the air.

“If financial challenges are going to show up, you need to address that,” she says. “Put yourself in the shoes of the employer, and think of any question they could ask you that would cause you discomfort. Be ready to answer that question – how’s your credit?”

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