Do You Know Your Hiring Risk Score?

If you’ve been applying for jobs with no luck, it might be time to look at your hiring risk score. A recent survey found 72 percent of employers conduct background checks on the employees they hire, and 29 percent check credit reports. 

What They’re Looking For 

When an employer is looking at your hiring risk score, they are looking at your credit report factors, which include late payments, excessive debt, and financial distress. These red flags can help an employer better understand how their potential new hire handles money and decision-making. When a new-hire has a clean report, the employer can feel confident in your solid decision-making abilities giving them peace of mind that you’ll have the same abilities in your new position. 

What They Can See 

Employers can not see your actual score on your credit report. However, what potential employers do see is a modified version of your credit report. The report omits information that could violate equal employment regulations, such as your birth year or marital status. The employer credit report also does not show your credit score or disclose any account numbers. What it does show is detailed payment history, your late payments, and overall debt.

In some cases, the platform will create what’s considered a hiring risk score (separate to your credit score), which shares with employers what your hiring risk is. It calculates the above, weighs each item, and creates your score. SmartCredit is one of these platforms. You can check your hiring risk through SmartCredit with a 7-day free trial. 

Notification and Permission

If your potential employer plans on running background and/or credit check, they are legally required to notify you of the intent and get permission in writing. Additionally, The Fair Credit Reporting Act requires the notice to be “clear and conspicuous” and not mixed in with other language.

Some states have laws prohibiting employer credit checks or restricting the information that can be on the reports.

States With Strict Laws 

While most states allow employers to run credit checks as part of the hiring process, some places have regulated the use of credit reports and placed restrictions on how the collected information can be used. These states include California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington. Similarly, some localities also have restrictions and prohibitions on employee credit checks, such as New York City, which prohibits credit checks for most job applicants. Check with your state’s labor department to find out if such laws cover you.

Warning Before Rejection

If an employer plans on rejecting you based somewhat or in entirety on your credit report, they are legally mandated to tell you before the decision is made. The warning before rejection must be sent as a pre-adverse action notice and must include a copy of the reports along with a complete summary of your rights. A portion of the rights includes a duration that allows you a specified time to respond. 

Time to Respond

Employers are not allowed to give a rejection and call it a day. Along with the above, employers must wait a reasonable period, generally three to five business days before it can be processed. The goal is to let you explain the red flags on the report, or, if the negative information is incorrect, let you fix the mistakes with the reporting company.

How to Increase Your Hiring Risk Score 

Checking your credit proactively lets you see what an employer would — and potentially fix any erroneous negative marks in advance.

Keeping your credit report in good condition is a smart financial move, It could help your chances of getting hired and help protect your credit score. 

Pay Your Bills on Time 

Payment history has a strong impact on your credit scores. Making on-time payments can help your score. What many people don’t know is the importance of how much you pay and when you pay. Rather than paying by the due date, paying more or paying sooner can also help. Learn more about the tools available to help you determine how much to pay and when click here. 

Use available Credit Lightly

Using less than 30% of your available credit on any card at any time — and lower is known to be better. Keeping your credit light shows you’re not overextended financially and can also help your score since your credit usage also has a significant impact on your credit score.

Monitor Your Credit Report Regularly

Monitoring your report is essential for several reasons other than seeing what you can do to increase your score. Monitoring your report can help you better understand how your daily decisions can affect your score for better or for worse. It’s common to have negative remarks on your credit that aren’t valid and require a dispute. By monitoring your credit score, you’re able to keep track and easily take action. 

Add Your Bills

As of a few years ago, credit isn’t solely based on your credit. Your credit score is now also calculated by how you keep your bank account as well as if you pay your phone and utility bills on time. 

If you’re looking for a new career, there’s a lot of things to consider, in addition to your hiring risk score or hiring risk index. To learn more about preparing before applying, visit our blogs here.

.