When you’re looking for a new job, you probably already know you need to polish your resume, practice your interview skills and put together a list of positive references. But there’s something else that might affect your ability to get hired: your credit.

Many employers perform background checks on job candidates, including checking their credit reports. But they can’t see the same information that a lender or creditor can see when they pull your credit. Also, there may be state laws that govern what they can do with that information.

Why Some Employers Want to Check Your Credit

Employment credit checks are most common with jobs that involve security clearances or sensitive job responsibilities like having access to money, consumer data or confidential information. There are certain justifications that certain employers may give for running credit checks on potential employees:

• Several late payments on your credit report might indicate you have trouble responsibly managing your agreements.
• Using too much of your available credit or having too much debt might indicate you are compromised financially.
• Personal financial difficulties might indicate you aren’t a good fit for a job that involves managing money, like an accountant or chief financial officer.

Are Employer Credit Checks Legal?

In some states it is illegal for employers to run employer credit checks. Or, they can only do so in certain scenarios. It may even be illegal for an employer to reject you as a candidate based on information in your credit report, as some states limit employer’s ability to use credit checks for hiring decisions.

Some cities have also enacted laws surrounding employer credit checks. If a potential employer requests a credit check as part of the hiring process, you should check the employer’s state and local restrictions. The legality of employer credit checks may also depend on what type of employer it is. For example, federal, state and local government agencies aren’t always governed by the same rules as private employers.

What Do Employers See When They Check Your Credit?

Employers who check your credit see a limited version of your credit report. It can include personally identifiable information that verifies your identity like your name and Social Security number. It won’t include your birth date. It can also contain information about your loans and debts, including payment history and whether you have any accounts in collections.

Employers cannot see your credit score. The report they receive includes information that makes up your score, but they don’t see a three-digit credit score number. Unlike the hard inquiries that result from a credit application, employer credit checks are considered a soft inquiry and do not affect your credit scores.

What Are Your Rights?

No matter where you or your potential new employer are located, there are certain rights you have surrounding employment credit checks.

• Employers must notify you if they plan to check your credit and obtain your written permission.
• If an employer plans to turn you down for a job based on information in your credit report, they must notify you before the decision is made with a “pre-adverse action notice” and include a copy of the credit report they used.
• The employer must give you time (generally three to five business days) to respond to the items in your credit report that are affecting your job application and dispute inaccuracies with the credit bureaus.
• Once they take action and turn down your job application, they must follow up with a “post-adverse action notice.” That includes the name of the credit bureau, its contact info and explain your right to get a copy of your report within 60 days.

Remember that if the employer is in a state where credit checks are fully legal, they may have a right to make it a condition of employment. However, that still means you have to provide permission to pull it. They can’t just run a credit check without your knowledge or consent.

To know what’s on your credit report, it’s important to use a credit report monitoring service. That way you can stay up to date on your credit report, scores and any changes, including possible suspicious activity.