Why do employers check your credit?

Applying for a job comes with lots of questions. Some general ones you’ll be well-prepared for: How’d you hear about this position? Can you tell us about yourself? Other role-specific ones will take some planning: Can you tell us about a time you handled a conflict with a colleague? How would you approach a situation where you need to do XYZ?

Other questions may come as a bit of a surprise: may we check your credit?

Yes, employers in the UK may check your credit in certain instances. But why? Here, we’ll break it down and explain why employers check your credit, what they’re looking for, and how you can prepare. Let’s dive right in!

Understanding Credit Checks for Employment in the UK

Employers sometimes run credit checks for a few reasons:

1. To verify candidates' identities
2. Assess candidates’ financial responsibility
3. Understand a candidate’s overall reliability and trustworthiness.

Essentially the main role of these checks is to help reduce the likelihood of employing someone whose finances make them vulnerable to fraud or corruption.

UK employer credit checks are limited in scope compared to full credit reports because they only access public data like County Court Judgments (CCJs), bankruptcies, and electoral roll registration. In other words, they’re soft credit checks that won’t affect your credit score.

Why Employers Conduct Credit Checks

Employers in the UK conduct credit checks for a mix of reasons. As we mentioned above, the primary reason is to assess a candidate’s general financial responsibility. In roles that involve financial management or access to sensitive data, the practice is fast becoming standard.

Who’s most likely to undergo a credit check for employment?

Roles within the financial services sectors are the most likely to be subject to credit checks. Performing checks helps tackle fraud and appraise employees who might gain access to sensitive customer financial data. Plus, credit checks are also a regulatory requirement from the Financial Conduct Authority (FCA) for certain positions in the financial services industry.

However, these checks are also expanding into other industries, especially in jobs where finances and sensitive information are part of the day-to-day workflows—for example, law, healthcare, and even specific IT roles.

In general, credit health checks are more common if a job requires you to:

• Handle large sums of money
• Access sensitive financial information
• Make financial decisions
• Offer financial advice to others

Again, while credit checks might not be mandatory for all positions that require cash handling or management, many employers use the process to mitigate financial crimes like fraud, theft, and embezzlement.

What employers can see on credit checks

Pre-employment credit checks give employers access to a limited version of your credit report. Here are the three core areas they can see:

Basic identity information

• Name
• Address
• Electoral Roll Registration

Public records

• Bankruptcies
• County Court Judgments (CCJs)
• Individual Voluntary Arrangements (IVAs)
• Administration orders

Your basic financial history

• A list of your credit accounts
• Payment history details
• Any accounts in collections
• Credit inquiries

What employers can’t see on credit checks

Employers' visibility into your credit score is limited to the details we mentioned above. What they won’t see includes things like:

• Your credit score
• Your income
• Specific account balances or any amounts owed
• Detailed payment history of individual accounts
• Protected information such as date of birth, marital status, spouse information, or ethnicity

How to prepare for an employer’s credit check

Poor credit won’t automatically disqualify you for a job. However, there are some steps that you can take to prepare for an employment-related credit check.

Check your credit report: If you’re applying to a job where a credit check is likely, you should request a copy of your credit report beforehand. This process will give you visibility into any issues and help you address errors or inaccuracies. Additionally, understanding what details are in your report can help you explain them.

Address issues: If you have any late payments, outstanding debts, or CCJs, take steps towards resolving them. While fully settling these issues might not be possible, catching up on payments can improve your credit score and demonstrate to employers that you have integrity.

Prepare to explain issues: If there are issues on your credit report that a prospective employer might query, it’s worth preparing for their questions. People run into financial difficulties for reasons beyond their control, such as job loss, medical problems, or divorce. Providing details can go a long way toward contextualising these events and assuring employers they were a one-off.

Be proactive: If you have credit history issues that might affect your employment, get out in front of them before your potential employer runs a check. Honesty and transparency are critical, particularly in jobs with financial responsibilities. Many employers will look favourably at candidates who show initiative and get out in front of challenges.

The Bottom Line

If you’re looking to transition into a new role where your employer may check your credit score, you should get prepared. The Pave app is your partner for getting ready. Not only does Pave Plus give you insight to your credit scores from Equifax and TransUnion in one place, it helps you protect and build your credit score.

With a credit builder account, your monthly payment behaviour is reported to credit reference agencies and can help improve your score over time. And with Pave’s Bills Alerts, you can connect to your bank accounts to receive alerts for priority bills that could impact your credit score.

To get ready for that job while protecting and improving your credit score, download the Pave app today!

‍