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The phrase "an internal candidate" is correct and usable in written English.
It is typically used in the context of hiring or promotions within an organization, referring to someone who is already employed by the company and is applying for a new position.
Example: "We are considering both internal and external candidates for the management position, but we believe that an internal candidate may have a better understanding of our company culture."
Alternatives: "an in-house applicant" or "a current employee".
Exact(59)
Mr. Babbio favored an internal candidate.
A search committee of deans and faculty members has recommended an internal candidate.
The White House is working to fill the post, probably with an internal candidate.
There are many reasons, both personal and professional, to invest in development for an internal candidate.
Otherwise, they risk elevating an internal candidate who is not prepared.
The position of human resources manager saw 180 interviewed before an internal candidate was selected.
Maybe he didn't know that an internal candidate had the gig locked up.
Fran Unsworth, acting director of news, is an internal candidate, as is Peter Horrocks, who runs the World Service.
Our Preparing as an Internal Candidate checklist provides additional questions to consider when applying for your next position at Harvard.
The researchers asked a large group of executives to negotiate compensation for an internal candidate for a new management position.
Boards often face a binary choice: Go with an internal candidate, or recruit an executive from another company?
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Since I tried Ludwig back in 2017, I have been constantly using it in both editing and translation. Ever since, I suggest it to my translators at ProSciEditing.

Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com