The Importance of Checking Credit During the Hiring Process

An applicant might be dressed to impress, have extra copies of their resume ready and put on a winning smile. However, don’t let these be the determining factors in your hiring process. You should also check the applicant’s background to make sure their record is clean and free of misdemeanors and felonies. A credit check is also necessary because an applicant’s financial past can shed some light about how they’ll be as an employee. You can gain a good understanding of how applicants handle money, their decision-making abilities and their potential for criminal activity. Here’s how the credit check process works.

What You Can a nd Can’t Do With an Applicant’s Credit Information

By getting credit check services for employers, you can learn more about your applicants and further narrow down your list of candidates. However, you have to be careful with their information and respect their rights to privacy. For example, some states forbid employers from considering credit information in the hiring process. If you live in California, Connecticut or Maryland, you won’t be able to consider credit reports when making hiring decisions, according to the National Conference of State Legislatures (NCSL).

Consider Applicants’ Legal Rights

It’s important to notify an applicant if you intend to check their credit. Before going forward with the process, you must first receive their written permission. The Fair Credit Reporting Act asks employers to be “clear and conspicuous” when notifying applicants. The notice should not be mixed in with other language. If you plan to reject an applicant based on their credit score, you must let them know before you make the decision. This is called a pre-adverse action notice, which includes a copy of the applicant’s credit report used and a summary of their rights.

In some cases, checking an applicant’s credit is necessary. Just be sure to acknowledge their rights.

Did you know that all the financial decisions you make today, could affect your ability to buy your own home in the future? And did you know your credit score plays a key role in this? It’s true. But despite this, many Americans have never even looked at their credit score or know what it is. In fact, four in 10 people have actually never checked their credit score before. That’s according to a survey by Chase Slate Credit. However, lenders view credit scores very seriously. In fact, a low credit score can stop lenders offering you the most competitive interest rates. A credit score takes into account your history of making bill payments on time and your spending and borrowing habits. But even if your credit score is poor, there are simple things you can do to help build it up.

Take out a personal loan

You may wonder how being in more debt could increase your credit score. But according to Crediful (https://www.crediful.com/best-personal-loans-for-good-credit), the trick is to make sure you make all of your repayments on time, without ever missing any. By taking out a personal loan and always making your repayments on time, you can show lenders that you are a “safe bet”. They can lend money to you without having to worry about having to chase payments at a later date.

Pay bills in your name

Even if you don’t currently own your own property, it is still important to pay some bills in your name if possible. This could be anything, from a cell phone bill to utility bills, but the most important thing is that you are making regular payments under your name. This shows lenders that you have a positive history with money, and makes them more comfortable lending to you.

Sign up for a credit card

Again, this may seem odd, as it means getting into debt in order to improve your credit score. However, the key here is to make sure that you only use the credit card for a small amount each month, and pay it off in full at the end – rather than just paying the minimum payment. This means that you are making regular payments without having to get further into debt, and this can help to raise your score.

Check your score regularly

When trying to build your credit score, you need to ensure that you are going in the right direction. Therefore, it’s never been more crucial than to check your credit score regularly. You may not realize, but you can obtain your score for free from the three major agencies each year. And if you space this out over the course of the year will give you a good idea of how well you’re doing.

There’s much to gain from making sure you build up a good credit score. And it’s even more important that you start now. Looking after your credit score means that the financial security you never thought possible, could be well within your reach in the future.

Credit scores are important. Anyone who has dreamt of owning a home, or starting and growing their own business, will assuredly need a loan at some point in time. Credit can also be helpful – if not necessary – for other large expenses such as buying a car, furnishing a home, or traveling.

Because credit is useful for so many things, it is important to have a good understanding of what makes someone a strong borrower, and how they can improve their chances of having access to the credit they need, when they need it.

Chief among these factors is a person’s credit score, which is often the first litmus test a lender uses to determine whether a loan or credit card applicant is someone they want to help. Credit scores involve complex algorithms, but there are some simple steps that you can take to make sure your credit score does not send lenders running.

1. Start building a credit history. If you do not yet have any loans or credit cards, apply for one or two low-limit credit cards. When you can, take out a small loan. Do not run up large balances, but use these credit facilities for daily purchases and make sure to make payments above the minimum, and on time. Try to pay off the balance each month if you are using your cards for daily living expenses such as groceries and household expenses. Credit scores rise as a person builds a history of handling credit responsibly, so you cannot have good credit score without building a history.
2. Do not miss payments. Always, always, always make at least the minimum payment on time. Missing payments not only counts against your credit score but also brings penalties or additional interest that make it even harder to pay down your balance in the future. Many loans or credit cards that come with attractive rates will reset to much higher rates if you miss a payment.
3. Find your sweet spot for a number of credit accounts. It is important not to accumulate too many sources of credit (loans or credit cards). Credit scores suffer if you have too many or too few. If you find that you have got too many accounts, you can close a couple. Too few, and you can add a new credit card or two (just be sure not to spend unnecessarily when you get your new cards).
4. Do not use all your allowable credit. Credit reporting companies use your credit utilization rate – total outstanding balances divided by total amount of credit that you have access to – as part of determining your credit score. What they want to see is that you are not running up credit balances simply because you can. Try not to let this figure rise between 25 to 40% on a regular basis. If you pay off your daily-use credit cards at the end of each month, this should not be a problem.
5. Track your score and underlying factors. Free credit reporting tools are available through some credit card providers and independent websites. Using these tools can not only keep you updated with the credit score that lenders will see but also point out areas for improvement based on your specific circumstances. They can help you determine the right number of credit accounts, keep track of your credit utilization rate, and may even remind you of loans or cards that you have forgotten. Consumers have better access to their own credit data than ever before, so use it to your advantage.

The world of finance and credit can be a tough place to navigate. Deciding how to finance a business or a large purchase can be tough enough. First, it is important that you have many options. While you have plenty of tools at your disposal, you need to make sure you have spent time preparing, so that you will look as attractive as possible on paper to potential lenders. Maximizing your credit score is one big way to earn the trust of lenders, so you can get the credit that you need to grow your business or buy a home when the time is right.

Sam Wilson

Sam is a financial specialist who’s helped people improve their credit scores and financial state across the years. Sam writes for fastcredit.repair and is dedicated to helping those in need. In his spare time, he likes to relax and take his kids to the local park.

When you’re fresh out of college, you are ready to start doing big things like get your first “real” job and buy your first home. You may need to buy a car, or you may want to start your own business. But in order to do some of those things, you’re going to need financing, and as a young person, you’re likely to find the process difficult and maybe even a bit confusing. You may start having this problem even earlier, like when you try to get financing to pay for college or to buy a car.

It’s important that you know what to expect with financing. Here’s a look at some of the most common financing types to help you understand where to start and how to build your credit:

Short-Term Loans

Short-term loans like installment loans online are a common source of funding for students and other young people. Some short-term loans cause more trouble than they’re worth, such as payday loans that have excessive interest rates. Installment loans are personal cash loans that have minimal requirements. You don’t have to have any credit – you just have to have a verifiable source of income and some other documentation. You can get small amounts – up to $1,000 or more, depending on the lender – which you can use to handle emergency needs, like fixing your car or making up the difference on a semester’s tuition.

Credit Cards

Credit cards are another popular form of financing for young people since they are easily obtainable. Some providers want you to have a little credit history before they will approve you, but others provide cards with low credit limits for those with no credit. Gas cards and store credit cards are the easiest to get, and they usually have limits of just a few hundred dollars.

Credit cards are also popular because they give people the freedom to buy whatever they need. However, students often overuse credit cards, so they should exercise caution with them. The high interest rates make it very hard to pay them back. Getting that first credit card can be an easy way to build credit, but if it’s misused, it can also bring down your credit.

Student Loans

Student loans used to be easier to get, but with so many defaults and the weaker economy in recent years, lenders have gotten tougher. You’ll most likely need a co-signor like a parent who has great credit to get approved for a student loan. You won’t have to pay anything on the loan while you’re in school, but six months after graduating, you could be looking at some hefty bills.

Fortunately, interest rates are typically low on student loans, but the monthly payment can be quite high if you borrowed a lot. You’ll have the ability to get on a structured repayment plan or to defer your payments if you find yourself struggling, but student loan debt can almost never be discharged. That means you’ll be on the hook for that debt until you pay it off. Borrow wisely.

Auto Financing

If you’ve used credit cards responsibly during your time in college, you may have enough of a credit history to be approved for auto financing to buy a car. Lenders will also consider your income when they review your application, so if you have a nice-paying first job and you have some credit, you have a better chance of getting approved for a moderate loan. But if you’re trying to buy a BMW on an average starting salary, you can forget about it.

Mortgage

Buying your first home is a momentous occasion, but you’ll have to have a lot of credit history to get approved. Mortgage lenders take a fine-tooth comb to your financial portfolio when considering your application. They will look at your job history, your credit history, your outstanding debt, and other financial issues. You must have a good history, a strong down payment, and a low debt-to-income ratio. The best thing you can do when you get out of school is start saving for your down payment and be sure to borrow responsibly.

Building your credit can be easy, but you have to take it slow. Start with small cash loans when you have an emergency, and use other credit cards and loans strategically to get what you need while building a positive payment history.

How to Improve Your Credit Score

Do you ever think about your credit score? Chances are you have if you are in the market for a new car or even to buy a house. Your credit score doesn’t seem important when you are young and don’t have a lot of responsibilities, but it is. College students are famous for racking up credit card debt in college that will stick with them until later in their life and ruin their credit.

If you are thinking about your credit score, you are probably trying to come up with ways to improve it. Doing this is actually not as hard as you probably think it is, but it will take some work in both the short and the long term. A lot of this depends on how bad your score is to begin with, but there is no mountain too high to climb in terms of credit.

Four Ways to Improve Your Credit Score

Be Fastidious with Your Credit Report – Don’t just look at your score and throw your report away. There could be damaging things on it that are incorrect. Consumers have the right to challenge anything on their report that they thing doesn’t belong. You might be surprised at how much your score goes up when even small debts are taken care. They really add up. Credit agencies are more than willing to work with you to help get rid of these if they are proven to be wrong.

Start with High-Interest Accounts – If you have multiple loans or credit accounts you are trying to pay off, start with the higher interest ones. This makes sense because the higher the interest rate, the more money you are going to pay to get rid of it. People don’t always realize how much interest really racks up on their credit accounts.

Get a Credit Card – A lot of people have probably told you to never have a credit card because they are trouble. There is some truth to this, but in order to have a good credit score, you must have some credit in the first place. The only way to build your credit score is to borrow money and pay it off. This will also create a history that lenders can look at to see if you are a viable option for a loan. In short, you can’t have a good credit score if you don’t have any credit. This seems obvious, but a lot of people don’t understand it.

If you are in need of money, you must understand where you can find it and the factors that lenders will look at when they make their decisions about whether to approve an application. You should avoid taking risks that might harm your future so look closely at the advisability of borrowing against real estate or from your 401 (k) which is your retirement fund to provide comfort in your later years.

Your credit score is central to being approved for a loan and you should certainly obtain the copy you are entitled to annually from the three bureaus; if there are any incorrect entries on any, report it and get corrections done as a priority. One of the factors in your credit score is your level of debt against your available credit. If for example you pay off a credit card balance with a personal loan, don’t close the card account because you will be reducing the credit you have access to even though best advice is not to build up a balance once again.

You should only borrow what you can afford to pay back to avoid getting into trouble even if a lender offers you more; that is temptation similar to the irresponsible use of a credit card.

Your Mortgage

Where you are looking for a mortgage, try to make a significant deposit; it will mean immediate equity in the property but often a better interest rate as well. Mortgages are long term, up to 30 years, and though future income is not guaranteed you can only make informed decisions when proceeding with a purchase. Down the line your real estate may well be able to provide security towards further borrowing.

Hopefully you manage your finances well in the future and if you have been saving in a 401(k) retirement plan for some years, compound interest will be your ally. Regular monthly saving grows far more quickly than you would expect while there are tax advantages in such an investment anyway. It is your money and you have access to it if you wish, though you are obliged to repay from your taxed income. The problem is that if you withdraw any money, you will lose the growth that the borrowings will have earned you until it is repaid. There are better ways to get cash than touching your 401(k) though some will require that you have a good credit score and you make a realistic application. This is where your real estate can come in.

Refinancing

Current mortgage rates are low and refinancing is certainly something to consider. You need to look at all the elements of refinancing, including all fees for settling an existing loan (with nation21cashloans.com) and setting up a new one. If you have significant equity then you can take some cash out when you do the refinancing.

This is something that is certainly worthwhile if the sums add up. If you can get a fixed rate you will know exactly what your future commitments are while there are tax benefits as an additional advantage. As long as you accept the consequences of not making your payments on time and you can accept the term involved, there is little against refinancing if all the detail is included.

Home Equity Loan

You will be borrowing additional money without it affecting your initial mortgage that continues to run. Such a loan is for a fixed term at a fixed interest rate that will certainly be higher than you are paying on your mortgage.

Such a loan is fairly simple and can bring tax advantages yet you will need to have a good credit score and you should understand how much you will be paying back in total.

Home Equity Line of Credit

This is a facility that also offers your real estate as security. It is flexible and you can take money as you need it and again there are tax benefits but the interest rate charged is variable. Be certain that you understand everything because sometimes you will be offered an interest only start with your monthly repayments rising after a certain period. Just as with credit cards, there is temptation to spend when you have a credit facility like this. Think about the number of people who have succumbed to temptation and now have expensive debt on their credit cards.

It is not only you, but the entire nation is struggling to survive the debt trap and to find ways to manage it effectively. The economic crisis along with housing and credit crunch has impacted the lives of many all over the world. You may even at times feel powerless and confused facing the ever-changing and turbulent economy. Therefore, as a good citizen, you can contribute to the nation’s management of debt by carefully and strategically planning and managing your personal economies which include your monthly income, investments, and all your expenses. To have a debt management plan is therefore extremely essential.

Control In Your Hands

It is true that you cannot have everything under your control and neither take the reins in your hands. There are some aspects of the economy and financial market that you should accept and work with, but there are also some aspects which are entirely in your control. At all times, you can have the control of your spending and your budget to cope up with the ever changing financial situation. No matter how confusing and disturbed things might get at the national level. Your fundamentals of smart management of personal finance remain the same always.

Change Your Habits

The first step to the ladder of success in debt management is to change your spending habits. To survive the financial crisis to have to make certain sacrifices which are not at all easy, given that you have been doing it for so many years. But you should think about the benefit and the ultimate peace that you would have in mind when you achieve financial freedom would be an enough boost to do so and also for the benefit of your family, who matters the most to you. If you go to the mode of denial as if nothing has happened would result in insurmountable debt situation and make things even more challenging.

Be Wise And Smart 

When you have to take some life changing decisions, it is imperative that you be wise and smart. To take some bold but useful decisions does not need big changes but even a small change can make a huge impact. Being a smart shopper is one of them. When you shop with a list in hand and cash, you do not overspend. Try to stick to discount items more so that you can also save while spending on your bare necessities. If you have dues on your cards, try to pay them on time so that you avoid penalties and surmounting debt as well. This would prevent you to take any credit card consolidation loans to clear them as well.

Go For Negotiation

Negotiating helps a lot in clearing off debts, and if you explain your condition and ask for a reduction in the interest rate or waiver of a certain amount, it would help you to clear the dues faster with less amount. Plan for exigencies and have an emergency account to save money for such purposes. Maintain a god credit score and make wiser long-term investments to have a better borrowing capacity.