In a competitive job market, background checks have become increasingly essential. An organization will perform an investigation to uncover anything in an applicant’s history that might raise red flags about future performance. While this seems to be an acceptable strategy, what happens if the background check uncovers errors in a credit history?
An organization might order a background check on a current or potential employee for a new job, a promotion or termination. The background checks are designed to thoroughly examine elements of your life including employment history, credit report and criminal record. A great deal of significance is placed on the credit history, though, when the anticipated position includes financial responsibilities.
Credit report errors can include:
- Incorrect account status
- Business system errors which might incorrectly code an on-time payment as a late payment
- Inaccurate or untimely reporting on credit limits
- Inaccurate addresses
- Accounts that are not correct
Even a seemingly minor inaccuracy on a credit report could have a cascading impact on the credit score as well as how an employer sees your history. The employer who ordered the background check must provide you a copy of the credit report that they used to ultimately make their decision. You can use this information to check the accuracy of the information.
It is important to note that while disputing a credit report inaccuracy will not harm your credit score, having an incorrect piece of data corrected can improve your overall score. Generally, there are three stages you will likely follow:
- Complete research: This is usually accomplished by ordering credit reports from the three major reporting bureaus. They are Experian, Equifax and TransUnion. While they won’t always match up exactly – some creditors do not report to all three agencies – you should address any inaccuracy.
- Build your case: You can start gathering evidence to prove the inaccuracy of the information you’ve identified. This evidence can include copies of bank statements, copies of credit card statements and copies of utility bills proving your address history for the last several years. Focus on whatever piece of information you wish to dispute.
- Dispute the error: In general, there are two ways to dispute the error: in writing with a letter, or through the online dispute process. All three credit report bureaus have a process laid out with links, addresses and support desk help on their respective websites.
An error on your credit report can spell disaster in many ways. From job opportunities and housing opportunities to getting a loan approval or other financial matters, many organizations rely on the credit report to provide information about the applicant’s credit history to help them make a decision. When you find an error, inaccuracy or inconsistency in your credit report, it is crucial that you take immediate steps to correct the mistake.