The scores can be taken from a credit report collected by one of the three credit bureaus: Eperian, Equifax and TransUnion. Lenders use credit scores in quickly measuring the paying capacity of a loan applicant. the higher the credit score, the better the paying capacity or less risk of default and the more likely that a potential borrower will get the best deal. The FICO score – developed by fair Isaac, is the most common used by the lenders. Your FICO scores which are derived from your credit reports are used by lenders as a measurement showing how much outstanding debt you owe and how much credit you have available to you. Having too much of both may not be a good indicator, leading to a denial of a new loan application.

Scrutinize your credit reports. report any inaccuracy or error for the bureaus to investigate and correct them. Some items may lower down your credit rating such as unused open lines of credit or account that you thought had been long ago. Each of the three bureaus may gather different credit history information which is why your credit score may vary. That’s why it is recommended to get reports from the three. If you have been denied of employment, credit or housing loan application within the past 60 days, you may obtain a free credit report from all the three credit bureaus.

Credit reports can be obtained free from Annual Credit report (which is the only authorized source according to the FTC), while you FICO score can be taken from MyFICO.com.

“The use of credit reports in employment is a growing practice that is harmful and unfair to American workers,” Chi Chi Wu, staff attorney at the national index of consumer prices Law Center, said testimony last year before the U.S. Equal Employment Opportunity Commission . “Basically, the issue at stake, whether employees fairly based on their ability to get a job or whether they are discriminated against flying because their credit history evaluated.”

Wu said at a disadvantage to the use of credit history in unfair hiring practices consumers who have fallen behind on their bills due to job loss.

“Simply put, an employee, their job should fall to pay their bills due to lack of income lose,” said Wu. “With the increasing use of credit reports, these workers now find themselves shut out of the labor market because it’s behind on their bills.”

Human resource officials said companies have not increased the use of credit reports on recruitment – and those who seek to use it for a pattern of financial management over the years do.

“If you missed a few payments in the last year, this is not that what they really look,” said Mike Aitken, director of government business at the Society for Human Resource Management. “They are looking at the overall report history.”

That is, a “failure to consistently [bills] over the period of the report paid life,” said Aitken.

“To go with a debt to a collection agency or are presented with a ruling against him / her because they can pay them an indication of the potential of the employee’s inability to manage their own personal finances and can therefore be considered by the employer and disability of the potential employee in a fiduciary role in an employment capacity to serve, “he said.

Aitken said the company’s credit reports generally require use them for certain positions. Examples include banks, personnel and positions, which must assume an employee has a fiduciary responsibility, he said.

The subject took on a higher profile in December, when the EEOC sued Kaplan Higher Education Corp., threw him a discrimination against black candidates by the way it uses in its credit rating adjustment process.

“Since at least 2008, Kaplan Higher Education has rejected candidates on their credit history,” the EEOC said in a statement. “This practice is unlawful discrimination on grounds of race effects and is neither justified nor professionally by business necessity.”

Kaplan, whose educational programs prepare students for employment in areas such as health, economy, law and paralegal services, said it was an “equal opportunity employer and we are proud of the diversity of our workforce.”

“Kaplan Higher Education performs background checks on all potential employees,” the company said in a written statement. “For employees whose duties will include financial matters, such as those that include students advice on financial aid, background checks and credit histories. This is not unusual.”

Before a company pull your credit report for employment purposes, it has to you in writing that it shall on your credit report.

In addition, your written permission.

You can always say no, but you run the risk passed over for the job.

“It’s worth dice,” said John Ulzheimer, president of consumer education at SmartCredit.com, a credit education website. “The downside is when the employer a credit mandates screening prior to filling the position, and you say no, it is an employer in the market at the moment. They will just go for the next three dozen candidates.”

There are ways around this:
Pull your credit report from each of the three national credit bureaus before you apply for a job. You can obtain free copies of your credit reports every 12 months at www.annualcreditreport.com.

“If there are mistakes, they get corrected,” said Ulzheimer. “You have to [employer] to assume that everything is correct on the credit report. It is not the employer to verify the validity of all confirmed on your credit report. This is the consumers job.”

Be open about black marks on your credit report.

“It is entirely appropriate to say:” I would like in advance with you. I would like to inform you that my credit card was not good “for whatever reasons, XYZ,” said Aitken.

Most companies give you the chance to explain, he said.

It is always better to take the problem before it takes control of your career prospects.

“You will not have the opportunity to offer an explanation after you have been disqualified, and even if you are, it is probably futile at this point,” said Ulzheimer. “At least that way you control the conversation as best you can.”

The Fair Credit and Reporting Act (FCRA) requires each of the 3 credit reporting agencies to provide everyone ONE free credit report every 12 months. As stated by the Federal Trade Commission, the only website you can go to access this free credit report is at annualcreditreport.com. This is absolutely the only site that is part of this program. But there is one drawback, this site only provides you a credit report/history, and not your credit score. You have to pay extra for the score.

Don’t fret, there are some other ways to get to get a free credit report and score. Many of the websites that offer credit reports have 30 day free trials. For instance, about a year ago I used freecreditreport.com, part of Experian. I ordered my credit report and score, checked it online, took notes, then called in a canceled within 4 hours of ordering the service. I was never charged a thing. Also, at one point, and I believe they still are now, American Express was offering a 30 day free trial to its card holders to receive credit reports and scores. Just login into your americanexpress.com account, and under other services sign up for the credit report/score program. Assuming you cancel the program within 30 days you will not have to pay a dime, and you will get your credit report and score from all 3 bureaus.

Another way you can sometimes get a free credit score is from your bank. Many banks use their own version of your credit score, some call it a soft score, meaning it is their own proprietary formula/score. I do know Bank of America uses this and it is factored into credit card application and mortgages with them. If you are nice to one of the branch employees, they will often share with you your soft score. While this is not your actual credit score, it will give you a very good idea of what your score is.

Also, if you meet one of these requirements you are eligable for a free credit report.

1) Denied credit, insurance, or a job due to information on your credit report. A notice stating which credit bureau supplied the report should be included in your letter of denial. You then have 60 days to request a free copy of your report from them.
2) Unemployed. You are entitled to one free report a year if you are unemployed and anticipate looking for a job within 60 days.
3) On welfare
4) Believe you are a victim of identity theft. Maybe you recently found a suspicious transaction, or lost your wallet. Place a fraud alert on your file and then ask for a free copy of your credit report.

Credit check is usually done to verify whether you are eligible for a loan or on any other forms of credit based on your past credit performances. This will reveal your past as well as your previous credit transactions with different lenders and how you deal with it. Thus, a credit check is the reflection of your past credit performance. It works like a report card, which reveals whether you have “passed” or “failed” in a particular subject.

Credit checks are done by lending institutions such as credit card companies and banks on individuals who wish to apply for a loan or any form of credit. In addition, credit checks could also be done by a homeowner whether an individual would be a good tenant or not, as reflected by his or her past credit performance. Insurance firms also run credit checks on individuals who wish to avail of their insurance policies.
You can obtain your credit report containing credit-related information from any of the three major credit-reporting agencies. Furthermore, you can obtain your personal credit reports for free as stated in the FCRA or the Fair Credit Reporting Act. Under this Act, every individual is entitled to receive a free credit report from any of the three major credit-reporting companies in the United States once a year – Experian, Equifax, and Trans Union. Your free credit report contain your personal information (such as your name and address), how you paid your past and previous bills, and any delinquencies you have committed such as late payments as well as if you have filed for bankruptcy.

To obtain your free credit report, you need to fill up the required form through a centralized credit report website on any of the three major credit bureaus in the United States. You will be required to provide some basic information, which includes your name, permanent address, your social security number, and your birth date. Your credit report is important in securing yourself against any attempts of identity theft such as credit cards misuse and other forms of fraud. In addition, you must update your credit report regularly as lending institutions would be using such reports to determine if you are worthy enough to be awarded with the loan you have applied for.

After you received your free credit report, you should read each section carefully. All aspects must be included in computing your credit score. So make sure you have paid attention to all of them. Check your report for any discrepancies and make sure that you have not missed any payments at all. Your credit report also comes with the list of individuals or business entities that you have requested credit information from. You may also check to see if such names or entities are familiar with you.

Your free credit report would be used in running a credit check to you when applying for a loan or any other forms of credit. Thus, make sure that it is free of discrepancies or erroneous entries. Keep in mind that this report will reflect your credit performance – ensure that you do not stumble anywhere so that your loan application would always be a success.