The One Thing Job Seekers Forget Employers Look At

Brush up your resume. Update your references. Clean up social media accounts and ...

There are some steps even first-time job seekers know to take ahead of formally seeking out new employment opportunities: Brush up your resume. Update your references. Flesh out your LinkedIn profile. Clean up your other social media accounts. Network.

It’s all fairly straightforward, but there’s something else very important new graduates and beyond will want to add to do their pre-employment search to-do list: Check your credit reports.

Why Should I Check My Credit Before a Job Search?

Some employers will pull a version of your credit report as part of their application process. And patterns of money mismanagement — like a bunch of missed payments or multiple collection accounts — could wind up hurting your odds of scoring a position, particularly if that gig involves handling cash, access to sensitive financial information, company accounting or government work. That’s why it’s a good idea to review your credit reports ahead of your job search.

You can pull a copy of your credit reports from each major credit bureau — Equifax, Experian and TransUnion — for free every 12 months via You can also view your free credit report summary, along with two free credit scores, updated every month, on

Financial Fact: Some states, including California, Hawaii and Washington, have banned employers from screening an applicant’s credit in certain circumstances. And, in all states, employers can only look at your credit report, not your actual credit score. Plus, they can’t pull your credit reports without your permission, so if a credit check is part of their application process, you’ll at least have a heads up. (There will be a form you’ll be asked to sign.)

What Am I Checking For?

First, you’ll want to make sure there aren’t any errors on your file that could needlessly cost you a prime position. These errors are more common than you think: a Federal Trade Commission study from 2012 found that one in five Americans had an error on their credit reports. If you find one, be sure to dispute it with the creditor and the credit bureau in question. You can learn more about disputing errors on your credit reports here. Keep in mind, credit bureaus have 30 to 45 days to investigate a credit report dispute, so won’t necessarily see that error disappear right away. Hence the reason you’ll want to do check your reports before your job hunt kicks into full gear.

Second, if you discover legitimate blemishes, you’ll want to determine if anything can be done to fix them. For instance, you might want to shore up unpaid collection accounts or pay off high credit card balances. Keep in mind, many missteps will stick around for awhile as most negative information stays on your credit file for up to 7 years. (Certain bankruptcies can even take up to 13 years to age off your reports.) Still, even if you can’t undo a troublesome line item, you’ll at least know that one is there — and will be able to address any issues upfront with prospective employers.

Finally, work on improving your credit overall so you won’t have to worry so much about a dreaded credit pull the next time you’re looking for new employment opportunities. You can rebuild bad credit by using a starter credit card to establish a new and improved payment history, keeping credit card balances below at least 30% and ideally 10% of your total available credit limit(s) and adding a mix of credit accounts organically as your score and/or finances rebound.

Not sure how to fully prepare for a job hunt? No worries. Recent or soon-to-be college graduates in need of some help can find a full 50 things to do to score their first job right here

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5 Random Reasons Your Credit Score Could Drop


You likely know that monitoring your credit score is an important part of managing and maintaining your financial health, but it’s also important to understand how your credit score is calculated and the key factors that are used in the calculation.

Even then, though, there are the outliers, the unknowns, the credit goblins that go bump in the night and, come morning, you’ve got a small ding on your credit score that you had no control over. While there’s not much, if anything, you can do to avoid this handful of scenarios, it’s good to understand that you can take action after the fact to remedy them.

Here are five random reasons your credit score could drop.

1. You Paid Off a Loan or Credit Card

Wait, what? While the expert consensus is that paying off a credit card or loan is positive and shouldn’t negatively impact your credit scores, lots of consumers report this happening. So what gives? 

There are a couple of things that can happen:

  • If the loan you paid off was your only active installment loan, you would likely see a small drop in your credit score. It has to do with your mix of active accounts, which is one of the five main factors that determine your credit scores.
  • If you have other accounts, it could be they have higher balances than the loan you paid off, meaning your credit utilization has shifted.

Of course, these things don’t tend to happen in a vacuum. It’s likely many things on your credit file are changing at once, so it can sometimes be difficult to pinpoint the precise impact one account is having on your credit score. You can keep track of what’s going on with your free monthly credit report summary from

2. Your Credit File Is ‘Mixed’ 

When an item on your credit report gets mixed up with someone else’s, it’s commonly referred to as “mixed files” and it can be very difficult to straighten out.

This happens most often when someone with the same name or a similar name applies for credit and a piece of their file becomes mixed with yours. A consumer with a common name like “John A. Smith,” for example, could see his file mixed with a John B. Smith or a John A. Smith, Jr.

To prevent problems of mixed files, always be sure to use complete and consistent information when filling out a credit application, especially if you are a junior or senior or have a common name. And to ensure your credit reports are accurate and complete, you need to check your free annual credit reports, which you can get on

Finding the problem is only the beginning — then you need to fix the errors on your credit report. You can do this by disputing the information with the credit bureaus yourself, but if you have trouble resolving the issues or are overwhelmed by the process, you can also hire someone to help repair your credit for a fee.

3. Your Issuer Closes Your Card/Lowers Your Limit

This situation just stinks. Not only do you lose your credit account, but it can also ding your credit score.

Creditors can close accounts for various reasons, including delinquency, inactivity and default. It is only necessary that they let cardholders know of the closure within 30 days of the account being closed.

Closing an account can have a negative impact on your credit score largely by affecting your credit utilization rate—the amount of available credit you have versus the amount of debt you are carrying. It could also wind up affecting the age of your credit report.

Likewise, issuers can lower your limit without warning. While other actions require 45 days’ advance notice, thanks to the Credit Card Accountability, Responsibility and Disclosure (CARD) Act, changes to your credit limit aren’t considered “significant changes.” (Such “significant changes” as they are called in the Truth in Lending Act, include changes to your interest rate, fees or grace period.)

With a lower limit, your credit score could go down if you don’t also reduce your spending, because the more you use of your available credit across all your credit cards, the lower your credit score will likely be. General rule of thumb is to keep the amount of debt you owe below at least 30% (ideally 10%) on your available credit for the best credit scoring results.

4. You Co-Signed on a Loan Gone Bad

Co-signing essentially puts your credit score in the hands of someone else. Now, when the person is paying the loan, it’s great for your credit score. Each on-time payment made on the loan gives your credit profile and credit history a boost. On the flip side, if they make a late payment, you make a late payment in the eyes of lenders.

If you co-signed a loan for a friend or relative and he or she is not able or willing to pay back the loan, you must step up or face the consequences, including a drop in credit score, if the loan payments fall behind. At the end of the day, your signature is on the loan, so you’re responsible for it.

5. Someone Stole Your Identity

New account fraud is a common form of identity theft: Someone gets their hands on your Social Security number and uses it to borrow money or open a credit card they never intend to repay. Since the accounts use your Social Security number, they’ll likely end up on your credit report, and that information (which is probably negative — identity thieves generally don’t make payments on your behalf) will factor into your credit scores. That’s why a sudden drop in your credit scores could be a sign of identity theft. A credit freeze can prevent new account fraud, but it doesn’t prevent someone from taking over and abusing your current accounts. Even if you have a freeze in place, it’s important to monitor your credit for suspicious activity.

More on Credit Reports & Credit Scores:

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How Many Americans Find Problems on Their Credit Reports?

credit reports

Do you know if there are errors on your credit report? Have you even looked to find out?

If you’re like nearly one-quarter of respondents in a recent survey, the answer is that you have no idea.

According to the survey, conducted in September by Qualtrics on behalf of our partner, 23.59% of respondents didn’t know if there was an error on their credit report; 24.02% knew there was at least one item they felt was in error; and 52.39% said there were no errors.

Checking your credit report is an important first step in taking control of your financial life. Of course, looking at your credit report is one thing — understanding it is another. (Here’s a cheat sheet on how to read your credit reports.) One of the biggest reasons to review your credit reports is to watch out for errors, because an inaccurate credit report can hurt your credit scores and, in turn, cost you a lot of money.

According to a 2012 report from the Federal Trade Commission, one in five people have flawed credit reports. Not all of these mistakes hurt credit scores, but many do. According to the same study, one in eight people have lower credit scores because of these mistakes.

Since your credit score typically determines what interest rate you pay on your debt, an artificially low credit score means you might pay higher interest than you otherwise should.

Keep in mind that even a tiny point penalty could cost you big. If your score just misses the next highest bracket because of those errors, you could be stuck in a lower-rated group and that means higher interest rates.

How Often Do You Check Your Credit Report or Score?

credit_report_errors2Of the 1,611 respondents to the survey, 27.06% said they check their credit report or credit score less than once a year, and 9.62% said they check weekly.

You can get your credit reports for free once annually from each of the three major credit reporting agencies at Look for any items that are clearly reported in error, but don’t stop there. By law, creditors and credit bureaus must correct or remove items if they are inaccurate, unverifiable or incomplete.

Checking your credit score regularly is also a good way to get a heads-up that there might be an error impacting your credit. (You can get a free monthly credit report summary from to help you spot changes along the way.)

More on Credit Reports & Credit Scores:

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How Long Does It Take for Something to Be Removed From My Credit Report?


There it is, like a big financial zit on your otherwise unblemished credit report, that derogatory account information. It’s ugly and you want it to go away as quickly as possible, but before you start panicking, you should start off by making sure you have all the facts.

First, find out exactly what you’re dealing with. You can’t fix what you don’t know about, so first and foremost, get your credit report (here’s how to get your free annual credit report) and your credit score (you can get two of your credit scores for free every month on so you can see how negative items might be affecting your credit.

After that, your options will depend a lot upon what type of negative information you’re dealing with. As a general guide, here’s how long it takes for negative account information to come off your credit report.

  • Collection accounts may be reported for 7 years plus 180 days from the date you first fell behind with the original creditor leading up to when the account was placed for collection.
  • Late payments may be reported for up to 7 years, regardless of whether the account is currently up-to-date. Get more details on how late payments hurt your credit here.
  • Bankruptcies may be reported 10 years from the date you filed, though the major credit reporting agencies will remove completed Chapter 13 cases seven years from the filing date.
  • Unpaid judgments can be reported indefinitely or until the statute of limitations expires, though credit reporting agencies will usually remove these 10 years after they were entered by the court.
  • Unpaid tax liens may also be reported indefinitely, though you may be able to get them removed sooner if you qualify under the IRS Fresh Start Program. Here’s how to handle old tax liens on your credit reports.

If you’re willing to do the work, there are some scenarios in which negative information — both accurate and inaccurate — can be removed from your credit report. (If you want help removing errors, you can go here to learn more about your options.)

Accurate, Negative Information

If there’s a blemish on your report that is legit, you still might be able to do something about it. Creditors have the power to correct or withdraw it. This is sometimes referred to as “re-aging” the account. You can ask creditors to stop reporting something that is accurate but negative because of extenuating circumstances, and sometimes they will agree.

For example, if you have always paid your credit card bill on time but then accidentally missed a payment when you were in the hospital or traveling, your issuer may be willing to stop reporting the slip-up. Or you might be able to persuade a medical provider who failed to properly bill you to pull an account back from collections.

Keep in mind that creditors and collection agencies aren’t supposed to remove negative items just because you agree to pay them. So you’ll want to have a persuasive argument as to why they should work with you.

Inaccurate, Negative Information

This one is a bit more straightforward, but still requires some effort. Requesting an investigation by the credit bureaus is the fastest way to dispute mistakes, but if it’s a more serious mistake, you might want to send a letter to the creditor in order to fully protect your rights.

“If information is changed by the lender as a result of your dispute, the lender must notify all of the consumer reporting agencies with which it shared the information of the change,” said Rod Griffin, Director of Public Education at Experian in an email. “So, you don’t have to contact [all three] credit reporting agencies, but it is still a good idea to do so to verify that the changes have been made.”

Griffin also advised working with both the creditor and the credit reporting company during the dispute process.

“The credit report reflects the information in the lenders records, so the lender needs to change that information in their files, as well as on the credit report,” he explained. “Working with the lender may result in your credit report being updated without needing to dispute through [the credit reporting agencies].”

Keep in mind the agencies and creditors need to act quickly.

“Erroneous information must be removed immediately,” Troy Doucet, a consumer attorney in Columbus, Ohio, said in an email.  Once the bureau receives notice that an error could be present, they have 30 days to validate the account.  If they cannot validate it within 30 days, or if it is wrong, then they must remove it.

“We recommend people send verification that the account is erroneous,” Doucet said.

And don’t stop regularly checking your report once an error is removed, recommended Michael Bovee, founder of Consumer Recovery Network and contributor. “I see too many instances where deleted items reappear later,” he said in an email.

Failure to remove the erroneous information is a violation of the Fair Credit Reporting Act, and you may be entitled to statutory damages of $100 to $1,000 per violation as well as actual damages for losses you suffered, emotional damages and/or punitive damages, and attorney fees.

You can find more information about filing disputes on

Bankruptcies, the Sticky Wickets of Credit Reports

There’s no getting around a bankruptcy on your credit report. By law, a chapter 13 bankruptcy public record will appear in a credit report for 7 years from the filing date. Chapter 7 bankruptcy remains for 10 years.

“The further in the past that the bankruptcy took place, the less impact in will have on credit scores and lending decisions,” Experian’s Griffin said. “It’s important to establish a positive payment history after bankruptcy. Over time, a positive payment history will help offset the negative effect of the bankruptcy.”

More on Credit Reports & Credit Scores:

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