The information in your credit report can indicate financial responsibility and personal integrity. A credit report shows your payment history and reveals any judgments against you. In a competitive job market, it isn't uncommon for employers to run a credit check as part of the application process. Employers don't usually base their decision entirely on your credit report, but the information can be a determining factor. Despite the misconceptions, medical debt does count against you. Medical debt on your credit report could be grounds to deny employment.
Right to Pull
According to a 2012 study conducted by the Society for Human Resource Management, almost half of employers run credit checks on job applicants. Credit checks aren't reserved for senior or executive job positions either. Even entry-level jobs often require credit checks. The credit check isn't exclusive to the application process. With your written consent, the employer can legally check your credit throughout your employment relationship. For example, the employer may ask to run a credit check if you are up against another employee for a promotion.
What Employers See
To protect your rights under federal Equal Employment Opportunity Commission laws, employers view a modified version of your credit report. According to Experian, employers will see all the accounts and your payment history, but the account numbers, your age and any references to your spouse are omitted. You don't have to worry about other employers seeing the inquiry on future reports. Although traditional inquiries can lower your score, an employer inquiry has no impact. The employer's inquiry is only visible to you, which ensures your privacy.
How Medical Bills Look
Medical debt on your credit report appears the same as any other debt. If the debt was charged off by the original creditor and sold to a third-party collection agency, it could have a significant impact on your score. Negative entries lower your score and raise red flags with employers, regardless of the circumstances or the nature of the debt. Employers don't always bother digging deep enough to differentiate the medical debt from any other type.
Evaluating the Applicant
Your credit report doesn't tell employers whether or not to hire you. The information revealed in your credit report is available to help employers evaluate the risk associated with hiring. Medical debt doesn't always ruin your chances of employment. Experian even urges employers to give applicants the opportunity to explain such blemishes. When evaluating candidates, the employer may be more inclined to overlook an outstanding medical bill than a past-due credit card balance.
- Society for Human Resource Management: Background Checking — The Use of Credit Background Checks in Hiring Decisions
- Experian: When Employers Check Your Credit
- CNN: Why Do Employers Care About Your Credit?
- Forbes: Has Your Credit Report Cost You a Job?
- Bankrate.com: How Will Unpaid Medical Bills Hurt Credit?
- George Doyle/Stockbyte/Getty Images