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Founders, Prosper and Credit Scores vs Credit Reports: Just Pay Your Bills On Time
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Who knew credit scores could be so controversial? My last post about credit and employment ruffled some feathers—and led some commentators to question my accuracy. My post (click here) explained that Gen Y needs to prioritize financial responsibility by checking their credit scores to ensure a positive record. It highlighted the fact that employers can, by law, request a copy of your credit report with your permission.
Private Profiles Finish Last
Bad Credit Can Cost You a Job.
John Ulzheimer, who previously worked for Equifax and Fair Isaac and is now an expert witness for the credit reporting industry insisted —in a posted comment and email—that I was wrong and promoting a myth. (Specifically, he referred me to his article, Credit Scores and Employment Screening: Dispelling the Credit Myth of the Decade)
Not exactly. What I specifically wrote, and what is true, is that credit agencies are allowed to release your credit report with your permission for employment screening. What I didn’t (and should have) made clear, is that this is a different type of credit report than the one sold to banks and other lenders—specifically, it includes your payment history, but not a specific score. Why didn’t I make that clear? Because, frankly, I didn’t know it. Now that I know it, all the advice in my post still stands.
To clarify, your credit score is that actual number assigned to you based on your credit data (payment history, amounts owed, length of credit history, new credit, and types of credits used). This is the number that allows lenders to quickly (and often automatically) evaluate how big of a risk you are for loans, mortgages, insurance, etc.
The two most common score systems are FICO and VantageScore (The VantageScore was established in 2006 by the three main credit bureaus –Experian, TransUnion, and Equifax—to compete with FairIsaac’s FICO credit score, which originated in the mid-80s to measure the riskiness of borrowers)
Your credit report is the summary of your credit history, including, personal information, the kind of credit (loans, mortgages, etc) and how long it’s been open, whether you pay your bills on time, banking information, credit inquires and public records.
But does that change the point? No. I suggested that Gen Yers (and other job hunters too) should check both their credit scores and their credit reports and take care to pay their bills on time. A low credit score, per se, won’t keep you from getting a job, because the prospective employer doesn’t see the score. But the same late payments that may drag down your score could also hurt you when it comes to getting a job, because employers do see your payment history—meaning your payment record.Free Annual Credit Report
To be doubly certain, I called up the Federal Trade Commission (FTC) to ask what is included in employment screening reports. I was told that the report includes the same information as any other credit report – minus the credit score.
The credit report still measures financial responsibility, which is what employers want to see. It’s what anyone reviewing you wants to see, and now has the ability to see.
In fact, a number of state bar exams require financial responsibility in the character and fitness evaluation:
“A lawyer is regularly called upon to handle a client’s funds or to advise a client with respect to money management issues. A history of credit problems (delinquent credit card or other charge accounts, missed loan or rent payments, etc.) indicates an applicant’s apparent lack of financial responsibility. The Board requires that credit problems be cleared before you can be licensed.” (Virginia Board of Bar Examiners)
“Your Social Security number may be furnished to the following agencies and individuals during the processing of your Bar Application including the board’s background investigation into your character and fitness for membership in The Florida Bar: credit reporting agencies, personal creditors, past and present employers, financial institutions…” (Florida Board of Bar ouline, established the Parisian flagship store in 2004, and now have other locations around the world, including Barcelona, Istanbul, Las Vegas, and New York.
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