Earlier this week, the three major credit bureaus announced that they would be overhauling their credit reporting of medical debt. As a hiring manager or property owner, you may be wondering how this will affect your employee or tenant screening. Let's take a closer look.
Employee Background Screening,
Tenant Credit Checks,
How to read a credit report,
Employment Background Screening,
"Better safe than sorry". An old adage that has withstood the test of time. Applicable almost every day and in every facet of our lives, from buckling up before backing the car out of the driveway to not opening that odd looking attachment to Aunt Harriet's email. Better safe than sorry.
Not just individuals are being cautious either. Employers engage in background checks and search the internet for the online presence of job applicants, comparing their image on social networking sites (SNS) with the persona a resume attempts to convey. Landlords, long the victims of careless or sometimes even dishonest tenants, are using every tool available to safeguard against renting to those who won't or can't meet their obligations under a lease. One tool used by employers and landlords alike is the credit report. Somewhat surprisingly, however, not everyone knows how to read a credit report.
There are multiple online sources available that provide instruction on how to read a credit report. Although they vary, the following is common to almost all of them. Here, then, are what you need to know about how to read a credit report:
Credit reports contain personal information including name, address and place of employment. Two things you should remember:
Keep confidential information private. Don't leave a report lying around for someone to find it.
Because incorrect information (including misspelling) is not uncommon, verify the information to be sure the report refers to who you think it does (including yourself if the report refers to you!).
The Credit Summary section provides information relating to the different types of accounts an individual has, including the total number, balance owing (if any) status (both current and delinquent) and the number of accounts contained in public records as well as how many credit inquiries have been made in the two year period prior to the date of the report.
The Account History section includes:
The name of the institution reporting the information.
Type of account: Revolving, education loan, auto loan.
Responsibility: Is the account individual or joint? Is there another person authorized to access/use the account?
Monthly payment: Minimum amount due per month.
Date opened (account established).
Date reported: Last date the institution updated with the credit bureau.
Balance. The amount owed on date report was generated.
Credit limit/loan amount.
High balance/high credit: Highest amount charged on the account and/or original loan amount.
Past due: As of date report generated.
Remarks: Comments creditor made about account.
Payment status: Current, delinquent, written off. May indicate previous delinquencies.
Payment history: Monthly payment status since account was established.
Collection accounts: May appear in account history/separate section, depending on credit agency.
The Public Records section discloses information (which remains on file for 7 to 10 years) about such things as bankruptcies, judgments, tax liens and any other adverse action taken by any creditor in an attempt to collect a debt.
Is there a question?
The section entitled Credit Inquiries lists any inquiries where information is shown to lenders pursuant for a request to process a credit application.
A couple of caveats, however. First, there are things a credit score won't tell you. As well, eight states now prohibit employers from doing credit checks on applicants. Twenty other states (and Washington D.C.) are considering similar legislation. As is the case with any screening tool, be sure that credit checks are legal in your state.
In understanding credit and how to read a credit report, you essentially "give credit where credit is due".
How to read a credit report