Can a High Credit Card Balance Affect a Background Check?

Employment background checks often include a credit check.
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High credit card balances on your credit report increase your utilization ratio, which reflects the amount of your available credit that you have used. Since how much debt you have accounts for 30 percent of your credit score, having a high balance on just one credit card can lower your score. This matters because what’s in your credit report can make you look financially irresponsible and maybe even untrustworthy to someone looking into your background.

Employer Check

Generally, you can count on a potential employer to pull your credit report as part of a background check if you go for a job in the finance, business or investment industry. Employers for other types of jobs may have their reasons for requesting your credit report as well. Although you must give your permission for an employer to do a background check, you could be in trouble if your credit score is low. You might not make a good impression if your credit report suggests that you aren’t responsible when it comes to budgeting and finances, especially if you’re applying for a job with a company where you would be managing money.

Insurance Company Check

If there are problems with your credit report, particularly your credit score, you could have difficulty getting auto insurance. Many insurance companies also use credit scoring to set premium rates, which means you may have to pay more for your auto and homeowners insurance if you have a low credit score. The reason? The insurance company may see you as a high risk. Avoid using your credit card to finance spending splurges and your higher credit score may get you cheaper insurance rates.

Tenant Check

A landlord will usually perform a background check when screening you as a potential tenant. Since he'll want to know if you can pay your rent on time, a credit check is normally part of the process. If your credit report shows a low credit score and lots of late credit card payments, a landlord may worry that he won't be able to collect the rent and you could find your rental application declined. Even so, according to the Bureau of Consumer Protection, if a landlord decides not to rent to you because of past-due credit accounts that show up on your credit report, he must notify you of the reason either in person or in writing.

Avoiding Problems

Before you think about applying for a new job, changing insurance companies or moving, it’s a good idea to check your credit report so that you know what’s in it. Requesting your free annual copy of your credit report from Experian, Equifax and TransUnion can prevent unpleasant surprises when someone else looks into your background. Look to see that all the information on your report is correct. Otherwise, any problems could have a negative impact on your credit score and make your life more difficult when they come to light during a background check.

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