Employment and credit checks

Can my credit score affect my employment?

Your credit score is based on information from your credit report. Some of this information may be seen by employers and other companies, which could affect your ability to secure a job, finance your own business, or work with clients.

Your credit report includes things like:

• How much money you owe
• Whether you meet your regular payments
• Whether you’ve applied for credit recently
• Who you’re financially associated with
• Public information, such as whether you’re bankrupt or you have a County Court Judgment

It’s worth noting that employers may not be able to see all of the information listed above.

Do employers check my credit report?

Companies may ask for permission to run a credit check on you before offering you employment – especially if the role you’re applying for involves dealing with money.

Why do employers want to check your report?

Mainly to check you are who you say you are, but also to ensure:

• You have a good track record of managing finances
• It’s not too big a risk letting you manage money
• Your financial behaviour won’t impact your performance at work

Can I be denied a job because of bad credit?

Unfortunately, yes. If your employer feels your current financial situation could impact your ability to perform well in the role, or your credit history reveals evidence of bad financial planning, they may decide not to employ you.

Before you apply for a job, you can get an idea of what information an employer might check by viewing your Experian Credit Report.

How will my credit score affect me if I’m self-employed?

If you’re freelance or you own your own company, your credit information may affect who’ll do business with you. For example, if you have a County Court Judgment this could suggest you’ve had difficulty repaying debt in the past, and some companies may decide it’s too much of a risk to work with you. It’s worth checking your Experian Credit Report to see if there are any negative influences that could put companies off.

Your credit information also affects your ability to borrow money, which you may need to do to run your own business. You can get an idea of your chances of getting credit by checking your free Experian Credit Score – the higher it is, the better your chances. Luckily, there are steps you may be able to take to improve your credit score.

Does my employment status affect my credit score?

Usually, your work situation shouldn’t affect your credit score. However, there are a few things to be aware of, including how an employer’s credit check will affect your report, and how changes in your income may lead to financial behaviour that could affect your score.

Does a credit check for employment appear on my credit report?

Technically yes, but only you will be able to see it. Companies can’t see if your report has been checked by an employer, so your credit score won’t be affected.

A record is made on your credit report whenever it’s accessed to help:

• Grant you credit
• Confirm your identity
• Assess your suitability for a job
• Give you a credit quote
• Supply a copy of your report to you

These are called ‘previous searches’ or ‘footprints’. They help you see who’s looked at your report, when and why. Importantly, there are two types: hard searches and soft searches. A hard search is done when you apply for credit – it can be seen by companies and may reduce your score. A soft search isn’t visible to companies, and it won’t affect your score. When an employer does a credit check on you, only a soft search will be recorded on your report.

Does being self-employed affect my credit score?

It depends. If you’re a sole trader or an individual member of a partnership, you’re personally responsible for any business debts. So, the way you manage your company’s finances can impact your credit score.

On the other hand, if you operate through a limited company, any business debts shouldn’t pass from your company to you, meaning they won’t impact your score. However, there may be exceptions to this, e.g. if you’ve made personal guarantees on business debt.

As a freelancer or business owner, you may find that your income fluctuates. This may make it hard to prove your ability to make regular payments, and lenders may turn you down for credit as a result. It can be particularly difficult to get a mortgage when you’re self-employed – for help and tips, read our guide to mortgages for the self-employed.

Will redundancy affect my credit score?

Losing your job won’t, in itself, impact your credit score. But losing your income may lead to financial behaviour that can lower your score – for example:

• You may struggle to meet repayments on time and in full – missed or late payments can reduce your score, and may lead to fees, a default, or a County Court Judgement

• You may need to take out more credit – each application will leave a mark on your report, which may put a dent in your score

• You may start using a larger proportion of your credit limit, which can lower your score

If you think you’re going to lose some or all of your income – and you’re worried you won’t be able to meet your payments as a result – you may want to contact your lenders to discuss your options in advance.

Will collecting unemployment benefits affect my credit score?

Your credit report won’t show if you’re receiving unemployment benefits. The impact of unemployment will only be reflected in your credit report and score if you’re unable to pay your debts. However, being unemployed may affect your ability to get credit, as you’ll usually need to detail your salary and job when you apply.

Can retirement affect my credit score?

Retirement shouldn’t need to affect your credit rating, as long as you keep up with your repayments and don’t take out too much credit at once. It can be helpful to have a clear monthly budget, and to plan ahead for any big purchases or financial changes.