As more and more people look to go back to work in 2012, there are a number of roadblocks that could stand in their way.

Among the issues to worry about is whether or not one’s credit report could hinder them in obtaining a new job.
With the economy still in a fragile state of mind, it remains an employers’ market, meaning they are primarily calling the shots.

In the event you’re job hunting and have a shaky credit history, should you be worried about having that history prevent you from getting a job?

As research shows, a number of employers feel using credit searches on applicants allows them to get a feel for if the applicant is honest and good at overseeing their daily lives.

For many individuals and also groups overseeing individual liberties, peering at one’s history with credit cards and loans, however, is taking things a step too far. Employers should not assume that because a potential candidate for their company has a bad credit history they will equal a bad hire.

In an effort to be sure that employers do not go too far in using credit history to screen each and every applicant, some states have been discussing and/or passing legislation to limit the reach of businesses.

Know Your Rights with Credit Checks

As federal law states, an employer must get written permission from an applicant to run a credit check. Given that replying no could intrigue a possible employer, how many applicants will actually say no to the request?

In Maryland, legislators went as far as to introduce a bill in the last year that would place limits on checking the credit of job applicants. According to legislators, doing credit checks on job applicants is much like an invasion of privacy.

While only a small percentage of states has set in place limits on how far employers can proceed with credit checks, another dozen or so are debating whether or not to follow suit.

Maryland’s proposed bill would allow employers overseeing sensitive data to run credit reports, including running checks on those applicants seeking high-level positions.

The bill would, however, ban employers from utilizing a credit check to deny an applicant for a job, or penalize or discharge someone currently working. Those companies violating the law could be saddled with a $500 fine on a first offense and up to $2,500 for repeated violations.

According to a 2010 survey of employers from the Society for Human Resources Management, 60 percent of employers stated they ran credit checks on a number of job applicants; an increase of 18 percent from a similar survey in 2006.

Given that the recent recession led to record numbers of individuals in temporary layoff mode and out of work permanently in a number of cases, advocates of a credit history protection bill state it is only right that applicants not be penalized with a damaged credit report.

What to Look for With Credit Checks

In the event a prospective employer seeks to do a credit check on you, keep these factors in mind:

• When it comes to jobs involving the handling money, credit checks demonstrate whether an individual has a pattern of handling money responsibly. If an employer views a history of late payments, major debts, or other financial problems, they may view it as an issue for certain positions;
• A credit report allows employers to see how you run your personal life. Bad handling of money could translate into someone who is irresponsible in other areas, i.e. showing up for work on time, meeting all their job responsibilities, getting along well with co-workers;
• The Fair Credit Reporting Act (FCRA) mandates your written permission for running a background or credit checks via a third party. While you can deny the permission, it could be held against you by an employer. In your best interests, let the business run the check and be ready to explain any matters that could be viewed as negative.

As you look to re-enter the workforce in 2012, keep in mind that a credit check could be coming your way.

Dave Thomas, who covers among other items background checks, writes extensively for Business.com, an online resource destination for businesses of all sizes to research, find, and compare the products and services they need to run their businesses.