How Your Credit
Could Affect Your Career

NEW YORK -- When you apply for a job, you expect the company to check your references. But do you also expect it to pull your credit report?

Tens of thousands of employers take a peek at this slice of your personal life: Do you have big debts, do you pay bills on time, have you ever been sued by a creditor, is there a tax lien on your home or a bankruptcy in your past?

Employers use these reports "to serve as a general indicator of an applicant's financial honesty and personal integrity," says Experian (formerly TRW), one of the three major credit bureaus.

Hmmmmm. If a reporter went bankrupt four years ago, does that mean she won't cover her stories well? If a nurse runs late on her credit card payments, will she forget how to administer shots?

Not one person I spoke with had any evidence to prove that good credit reports predict good job performance. Regarding employees who handle money, Experian's Marty Dee calls it "more of an intuitive situation, where if someone has a huge amount of debt, they might be susceptible to bribery or theft."

But even if that's reasonable, what about the rest of us? Are employers just curious, or were they sold on this peekaboo game by the firms that peddle credit reports?

"We have found in our privacy surveys that employees want their potential co-worker checked out," says Dave Mooney, spokesperson for Equifax in Atlanta, the largest firm that does pre-employment screening.

He adds that the reports submitted on job applicants don't show age or marital status, which aren't supposed to be considered in the hiring decision.

But there's always the risk that your credit report might contain an error -- maybe listing a bankruptcy for someone with a name similar to yours.

The credit-reporting firms piously say that they warn employers not to use the reports alone, when judging a job applicant. But what will a personnel officer think if he or she sees a bankruptcy on your record -- whether it's correct or not?

At present, a potential employer doesn't even have to tell you that your credit report will be pulled. A new federal law effective in October changes that.

Here are the new rules, although I doubt that they'll protect you very much:

1. When you apply for a job, the company has to get your explicit OK to look at your credit report. The paragraph granting permission can't be buried in the job application form. You have to sign it separately.

What if you refuse to sign? The company will probably assume that you have something to hide, which would kill your job application then and there. In so coercive a situation, few people will exercise their new privacy rights.

2. If you're rejected for the job based "in whole or in part" on an item on your credit report, the company is supposed to do two things: Give you a copy of the report before turning you down and give you written instructions on how to challenge the accuracy of that report.

But how can you know if the company actually followed this rule? It's easy to claim that you were turned down for reasons entirely separate from what's on your credit report.

And what if you're shown the credit report and see that it's wrong? Is the company going to hold open the job while you go through the laborious correction process?

Any job hunter should check his or her credit report for accuracy. But it's going to cost you. Experian used to send reports free but they stopped on March 1.

Thanks to state laws, residents of Maryland, Massachusetts, Vermont and Georgia can still get free reports whenever they want to check on what creditors are saying about them.

In Georgia, however (Equifax's home state), this pro-consumer law is under fierce attack. The state Senate has voted for repeal; concerned residents should get to their representatives fast, says Ed Mierzwinski of the U.S. Public Interest Research Group in Washington, D.C.

Where credit reports aren't free, you pay up to $8 (up to $16 for a married couple) at Equifax (800-685-1111), Experian (800-682-7654) and Trans Union (316-636-6100 -- Warning, Trans Union gives terrible telephone service).

For job hunters, this may be an unavoidable expense. But it gravels me. You're paying to protect yourself from others' mistakes, for a use of your credit report that shouldn't be legitimate in the first place.

Jane Bryant Quinn welcomes letters on money issues and problems but cannot offer individual financial advice.