Can poor credit cost you a job offer? Depending on the job you’re applying for, it just might.
While studies have not shown a correlation between lower credit scores and financial crimes, it’s still standard practice for many employers look to your credit history as one indicator of future job performance. Your credit report is a detailed picture of your credit behavior that lists information like balances on loans and credit accounts, debt collections and late payments.
A job candidate must give an employer written permission to check their credit reports (potential employers don’t check credit scores). If the job seeker refuses to give permission, the employer might turn them down for the job, says Barry Paperno, Credit.com’s community director and credit scoring expert. That might seem unfair given that bad credit can arise from medical bills, layoffs and other factors out of one’s control, however, there are several ways to rebuild your credit and some states have enacted laws that limit the use of credit information in the hiring process. That’s the case in California, Connecticut, Hawaii, Illinois, Maryland, Oregon and Washington, according to the National Conference of State Legislatures.
[The Credit.com Forum: How long can a collection agency collect on an old debt?]
Fewer organizations are checking job candidates’ credit — in 2011, 53% of employers did not require a credit check, up from 40% the previous year, according to the Society for Human Resource Management. However, of those who do check credit reports, 87% of the candidates are seeking jobs with financial responsibilities, 42% are applying for senior executive roles, and 34% are “candidates for positions with access to highly confidential employee information.” So if you’ve dusted off your resume but haven’t yet touched your credit report, here’s a look at which professionals might want to get started:
Mortgage professionals: Depending on which state you reside in, you might be asked to hand over your credit report, says Gerri Detweiler, director of consumer education for Credit.com. Ever since the housing bust, state and federal governments have been wary of indebted home loan professionals helping people avoid foreclosure and bankruptcy. Today, licensing rules are stringent and all loan originators, brokers and lenders must meet them in order to practice in the state.
Accounting/finance professionals: If you’re applying for a job where you’re going to be handling money, some employers believe a job candidate’s credit report is a partial factor in determining whether you’re actually good at handling money and that you have integrity. Similar positions that might require a credit report check include bank tellers, accountants, store managers and minor retail workers, reports the New York Times.
[Credit Score Tool: Get your free credit score and report card from Credit.com]
Military/government workers: Even Uncle Sam could turn you away if your credit is bad. That’s because the federal government checks credit reports for many of its jobs, as do state and local governments.
How to prepare for your job search
Before you apply for jobs, it’s important to know what’s going on with your credit. You can get an initial look at your credit for free by checking Credit.com’s Credit Report Card, which gives you your score and a summary of your credit report, and can initially alert you to problems with your credit report. (It’s important to note that employers do not check your credit score — the number calculated from the info in your credit report — but your credit report. So always check your credit report to see what prospective employers are looking at.)
Then, go to annualcreditreport.com to get a free copy of your credit report from one of the three nationwide credit reporting agencies. Check it for inaccuracies, and dispute any errors. If there is accurate but unfavorable information in your credit report, consider discussing this with the hiring manager and tell them what steps you’re taking to remedy the situation. According to one boss who checks credit reports, sometimes communication can make a big difference.
[Free Resource: Check your credit score and report card for free with Credit.com]
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