Can Employers Check Your Credit – #CreditScope
CreditScope
Do you have questions about credit?
Join our live video chat every Tuesday and Thursday at 2:30 p.m. ET on Periscope. Rod Griffin, Director of Public Education at Experian, is available to answer your questions live.
Here are some of the key questions Rod addressed in today’s scope:
Is there an auto credit score and how can I find out what it is?
Yes, there are auto credit scores – scores specifically for predicting the risk of making a car loan. Ask your lender if it can share the score they used, and if so, what the scale is for that particular score and if it is a score specific to auto lending.
Do medical bills affect your credit
Medical bills won’t appear on your credit report unless they are unpaid and become collection accounts. Medical collections are debts that you owe and can affect your credit scores. Therefore, they will appear on your credit report and they can hurt your credit scores. When the lender sees your report they will see the debt listed as “Medical Payment Data”, but they will not see any medical information such as who provided the treatment or what type of treatment was given.
The newest credit scoring models, which are now beginning to be adopted, will exclude paid medical collections from the scores, so paying them off will be even more beneficial.
Changes also are being implemented in the credit reporting system to not display medical collections for six months to ensure they are in fact collection accounts and not the result of billing errors or insurance disputes.
Can employers check your credit?
Employers can request a copy of your credit report once they have received written permission from you. They do not receive nor can they request your credit score. The report that an employer receives is modified to omit certain information that could be used to discriminate, such as your date of birth and spouse information.
Employment credit reports also omit account numbers in order to help protect you from credit fraud.
Can a late payment be removed from your credit report?
If a late payment is accurately reported, it will remain on your credit report for seven years. If the late payment is reported in error or is the result of fraud, you can dispute the information and can upload any documentation you have to support the dispute.
The dispute and documentation will be sent to the source of the information, in this case your lender, who then must review its records and either verify the information as accurate, have it updated or remove it from the credit file.
If you have always made all your payments on time and feel that a one-time late payment is the result of extenuating circumstances, you can certainly discuss those circumstances with your creditor and see if they are able to remove the late payment as a one-time courtesy.
How many credit score points do hard inquiries carry?
According to FICO, a hard inquiry is typically 5 to 10 points when you apply for a new account. The impact inquiries have on credit scores is very minimal and only for a short time. Hard inquiries will stay on the report for two years but will typically only affect scores substantially for two to three months.
Recent inquiries indicate to lenders that there may have been a new account opened that does not yet appear on the report. If there are multiple new inquiries within a short period of time, this may indicate financial distress to lenders. The longer ago these inquiries occurred, the less of an impact they will have on your credit scores.
Check out the scope to hear answers to all the questions asked today, and scroll down to see Rod’s responses to a few unanswered questions:
Does wage garnishment show on a credit report or affect credit?
Wage garnishments, which are the result of a court order, allow a lender to collect the debt through direct deduction from your paycheck. Garnishment proceedings are a matter of public court record, but those records are not reported on consumer credit files. However, if there is an account on your report that is being paid through wage garnishment, the creditor can add a statement or indicator to that account to show that payments are assured by wage garnishment.
Because wage garnishment is a final result of attempting to recover an unpaid debt or financial obligation, such as child support, it may be viewed negatively by lenders.
How do repossessions affect credit scores?
A repossession is a major derogatory item in a credit history and could significantly affect your credit scores. A repossession will remain on your credit history for seven years from the delinquency date of the first missed payment leading up to the status of repossession and the term “repossession” will be shown as the status of the account until it is deleted. Once paid in full, the status of the account will be “Paid Repossession.
What is the average credit score needed to buy a home?
Credit scores are just one of the factors your mortgage lender will use to determine whether you qualify for financing. Every lender uses different methods to determine your credit worthiness. So, in some cases, a minimum score is difficult to determine for conventional loans. In other cases, especially when loans are underwritten or insured by government organizations, there are specified minimum credit scores to qualify.
The score your lender will accept for a conventional loan can be determined by many factors, including your payment history, your salary history, your current wage, your available credit, the scores other lenders are accepting and the current economic climate. In tight economic times, a score of at least 650 will get you in the door for financing but in order to receive the best mortgage terms you may need a credit score of 720 or higher.
Scoped on: 03/1/2016