Question: In a recent interview, I was asked how much I earned at my last job. That meeting has led to the third interview, so should I assume that the employer would not have continued unless it is willing to pay me in the same range?

-- Neal, Albany, N.Y.

Neal: To put it bluntly, the interviewer asked you this question during the first interview to determine if the company can afford to hire you. Most companies of any size have established salary bands or ranges for each position. There's a general minimum and a maximum amount it pays for the job on each end of the band, the minimum being what an inexperienced person might make and the maximum being the amount that long-term or highly experienced employees would make. The company is exploring whether it's likely you would accept an offer that's within its range of pay for the job.

Marisa Zona, talent-acquisition program manager for Fair Isaac Corp., an analytic software company based in Chicago, says that's the main reason her company asks a candidate about their current compensation.

"We want to understand going in that if the candidate demonstrates the qualifications needed for the job, we could extend an offer that would be valuable to him or her and within the range," says Ms. Zona.

Ms. Zona, who oversees recruiting for the 3,000-employee organization, says this question is standard for candidates interviewing at Fair Isaac. A human-resources professional usually asks it to avoid making the candidate and the hiring manager uncomfortable during discussions about the job. She recommends answering it honestly, since some companies ask to see candidates' W-2 tax forms showing their actual earnings.

Some career advisers suggest at least trying to be a little less forthcoming in responding to a current-salary question, especially early in the process. Such coaches say that if your current or prior earnings come out too early in the interview process, you may be giving away information that can work against you. The rule about pay discussions during job interviews has always been: "Don't be the first to bring it up," because you'll probably mention a number that's too high or low.

Once the company knows what you are earning, pay coaches say, it can offer you a salary that matches or only slightly exceeds this amount. "If you tell them in clear terms what you are making, you will probably undersell yourself," says Lee Miller, a former human-resources manager and now a negotiations adviser in Morristown, N.J. Instead, if you research the range of pay for the job and ask to be paid at the top of the range, you might get it, he says.

It never hurts to arm yourself with information about average current pay levels for professionals in this position in your geographic region and at companies of a similar size. Then, if the employer does offer you an amount that's below this "market" rate, you can say that you're job hunting because you want to earn the market rate for your job.

Still, Ms. Zona says, asking to be paid at the top of the range isn't realistic given how companies operate. At Fair Isaac, for example, pay discussions typically fall to HR representatives. No hiring manager has ever authorized her to offer a candidate any amount as long as it's within the range of pay for the job, she says.

Typically, the hiring manager will specify an amount to offer that fits the department's budget and represents a raise for the candidate, says Ms. Zona. Market conditions have a lot to do with the offer. If there's a war for talent, offers may be higher than average. If the market is flooded with candidates or a recession exists, people might be happy to make lateral moves.

"People are very sensitive to the bottom line," she says. "Everyone wants to extend a fair offer, but no one wants to be taken advantage of."

Pay coaches sometimes urge candidates to state their prior pay in terms of the "total compensation package" they were earning, which might include bonuses, vacation, benefits and so forth. The reasoning here is that if the amount isn't too specific, it will be hard for the company to make any comparisons, says Mr. Miller, author of "Get More Money in Your Next Job" (McGraw-Hill, 1997).

But that approach has its risks, too, especially if you end up puffing the amount. We've just been through a wave of accounting scandals and the subterfuge associated with them. Now the pendulum has swung toward integrity and honesty. If you're even perceived as fudging the amount you previously made or are making, you'll have some explaining to do if you're asked to provide a W-2.

Job-offer talks should represent a win-win for both sides. If you aren't negotiating in good faith, you're starting off on the wrong foot with a new boss. You don't want to press your manager into the corner on pay. Both sides probably will need to make some concessions. Negotiating an amount that's based on embellishment and exaggeration puts you in the wrong position if you want to be respected and have a good career run with this company.

The bottom line? Since you're on your third interview, you can assume the company is comfortable that it can meet your compensation expectations and stay within its pay range for the job, says Ms. Zona.

A final thought: Some candidates are afraid to ask for higher pay amounts because they fear their job offer will be withdrawn. That's a rarity. Employers who want to hire you won't change their minds because you asked for more. Just ask in the nicest way possible. Who knows? You might get what you requested.