Credit checks are commonplace in the UK these days, playing a major role in events such as applying for a mortgage, car finance and renting a property to name just a few. Less commonly known is that sometimes even a new job can require that you pass a credit check as part of the selection criteria.

Here, we'll explain a bit more about why that's the case but if you think that you're likely to be credit checked as part of an application you've made or are about to make, it's important to find out for yourself what's being reported and sooner, rather than later. checkmyfile will show you everything being reported by all three Credit Reference Agencies. Whilst not all of this information will be visible to a prospective employer, it'll include the stuff they will be able to see and allow you to make sure it's all correct.

You can try checkmyfile free for 30 days and then for just £14.99 a month which you can cancel online at any time during or after the trial period.

In the past, employment credit checks were fairly limited in scope and were only really used for roles in the financial sector where handling money was involved, or jobs in the police force or legal profession. Today though, the number of employees (and the breadth of industries they fit into) undergoing a credit check as part of their pre-employment routine is increasing.

Since General Data Protection Regulation (GDPR) came into force, many companies have had to redouble their efforts to ensure employees (both current and prospective) aren’t likely to misuse their position.

In 2018, a Clearswift report found that 42% of security breaches came from inside organisations. The introduction of GDPR saw the maximum fine for infringements increase to €20m or 4% of annual global turnover (whichever is greater) – quite a motivator when it comes to minimising the risk of an internal breach.

So, what are employers looking for when they carry out a credit check and how can you make sure there’s nothing on your Credit Report that’s likely to harm your chances of landing your dream job at the last minute?

What information will employers check?

In the vast majority of cases, employers will only access the Public Information contained on your Credit Report, via an Enquiry Search which is very different to the full dataset that a potential lender would assess when you make an application for credit.

The mainstay of the public component of your Credit Report is your Electoral Roll listing and any Court Information such as Insolvency or Court Judgments. Your name, address and date of birth are also listed.

Public Information is reported by all three of the UK’s Credit Reference Agencies, but because information is updated by each independently, differences can occur. For that reason, it’s important to check all of them to make sure that there’s nothing unexpected lurking and that nothing important has been missed.

The same is true of landlords performing searches on potential tenants: only Public Information will be assessed. As long as it comes back clear, there should be nothing to worry about.

In all cases, this type of search won’t impact on your Credit Rating and serves simply as an audit footprint of who has accessed your Credit Report.

Why do employers carry out credit checks?

While a credit check relating to an application for credit is designed to assess your ability to pay on time, employers have a different motivation.

Even without being able to assess your full Credit History (how you’ve managed individual credit accounts in the past), any organisation searching your Public Information should be able to spot signs of potential financial distress.

This is important, as a potential employer could view serious negative information such as Bankruptcy or CCJs as such a warning sign.

Employers want to be sure that your financial position won’t impact your performance and that you don’t pose an increased risk when it comes to handling money or sensitive data. Put simply, the reasoning is that someone under severe financial pressure might be more susceptible to outside influence, bribery or even theft.

Will I pass an employment credit check with bad credit?

In the same way that the decision whether to approve an application for credit lies with an individual lender, each employer will have its own criteria when it comes to what is an acceptable level of risk when making a job offer. The severity and recency of the information will be a major factor. Very recent adverse information is much more likely to be a concern to a potential employer than a CCJ from a number of years ago.

Remember though, credit checks for most jobs will not look at your full credit history, so things like late payments or even defaults won’t be taken into consideration.

When bad credit can affect an application

Some jobs will involve a much closer scrutiny of your financial past. If you are applying for certain positions with high levels of responsibility in the finance industry, law enforcement, or with government agencies (such as HMRC), a full credit check – like ones performed when applying for a loan – may be carried out.

A full credit check will reveal not just Public Information, but also your full Credit History, including how you have managed individual accounts, any adverse information, and detail around your current balances, limits and levels of borrowing.

Financial Associations (individuals with whom you have or have had a financial connection) will also be visible on a full credit check, and your association’s Credit Report may be assessed alongside yours to help the employer make their decision if they feel your relationship with this person could have a significant effect on your own finances.

How long does information stay on my Credit Report?

Information remains on Credit Reports for varying amounts of time, but most information that is likely to cause you issues when applying for a job remain visible for six years, including late payments, defaults and court information. The status of any adverse information may change in this time, for example to reflect whether a bankruptcy has been discharged or a CCJ satisfied.

Can I see the information for myself?

If you’re worried about what might show up in a credit check, you can see for yourself what a potential employer will find by checking your Credit Report beforehand.

If you haven’t already, you can see the UK’s most detailed Credit Report by signing up for a free 30-day trial of checkmyfile, which is then just £14.99 a month afterwards and you can cancel online at any time or by secure message or email.

Updated on 10 September 2021 by Sam Griffin