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Can Bad Credit Hurt Your Job Search?

Can bad credit hurt your job search? Who would have ever thought that having bad credit could hurt your job search? It's bad enough that you are drowning in debt, but now you can't get a job to pay it off. That's ridiculous!

Do Employers Consider an Applicant's Credit History?

Well, I guess that's the way it is. An applicant's credit rating can, on some level gauge of how they handle responsibility and their personal affairs. For example, if you are behind on your mortgage payments, that could indicate financial trouble, or you are irresponsible because you haven't made your payments on time. What could that mean? If you are experiencing financial hardship, an employer might think that you could be tempted to steal. You may be required to handle money or be privy to company secrets. The following article explores how employers can use this information, what they can see, and strategies you can use to avoid or minimize the damage. Some states and localities don't allow these credit checks, in the US you can visit the website of the Department of Labor to check the laws in your area.
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You May Not Get Hired Because of Your Credit

Obtaining your records doesn't happen at their whim; they are required to get your written permission to access your credit history. Using a credit report as a measure of an applicant's value may not be fair or accurate. However, when you don't know someone, and you want to hire them for a sensitive position, you use all the resources available to you.

  • What Do Employers See?
    The employer can request a copy of your report from Equifax, Experian, or TransUnion. When they access it, the incident registers as a “soft hit” so it doesn't affect your rating like applying for a loan does. The scope of the information that you would see is not the same as that which the employer sees. The employer won't know your credit score, account numbers, age, marital status or anything else that could breach the Equal Employment Opportunity Act of 1972.

    What they do see is dictated by the Fair Credit Reporting Act. Employers will see how responsible you are at making your payments and more. Here is a list of examples of the kinds of information they could see:
    • Credit cards
    • Late payments and defaults
    • Mortgages and loans
    • Liens and judgments
    • Bankruptcies
    If you are worried about what the hiring manager may do with this information, then you should read the next section.
  • How Can Employers Use This Information?
    If employers are going through the trouble and expense of pulling these reports, they have good reasons for doing it. A job position that involves money, high-level decision-making, or company secrets, requires due diligence on the part of the employer to hire a responsible, trustworthy person.

    Blemishes on your report can be a reflection of how you conduct yourself in your personal life. If you did everything correctly, your report would be spotless. Someone might use that as a signal that you are responsible and organized. Why is that? You must be paying your bills and doing so on time. You must be true to your word if you have paid off student loans, credit card debt, or mortgage loans. Even if they are not paid off, but the balance is current, it can be an indicator of your character, honor, organizational skills, and the ability to follow through on commitments.
  • What Can Be Done to Fix This?
    The short answer is: live within your means, pay your bills on time, and stay out of trouble. That's an overly simplified answer, but you know it's true. Unfortunately, it's not always as simple as that. Even if you are the most responsible person out there, a job loss or medical emergency can create financial stress and damage your credit.

    Can bad credit hurt your job search? To start with, it would be a good idea to check with all three credit reporting agencies, Equifax, Experian, and TransUnion to get copies of your credit reports. This article is not trying to sell you anything. You will need to use Google or another search engine to find places where you can get your credit reports.

    After you have your reports, you know what is documented on them so there won't be any surprises later. If you do have blemishes on your credit report, it is a good strategy to create sound explanations about why they exist. If an employer questions you, there will be ample time to formulate a positive response. If any of these problems apply to these responses can be as reasonable as:
    • I had a family illness that depleted my savings and I had to use a credit card to live. I am working with the credit card company, we negotiated a payment plan, and I am now in the process of paying down the balance.
    • My credit card was stolen and my account was maxed out. I couldn't afford to pay the bill. I am now in the process of having the charges investigated, then removed from my account.
    A known problem that can occur is that there could be mistakes on your record that were not caused by your actions. Contact the company that reported the error and work with them to have the mistakes removed. That is another reason to be prepared ahead of time.
From the examples listed, it should be easier for you to understand how credit can be taken into consideration when evaluating an applicant. For a smoother interview process, keep a handle on your credit and use it wisely to avoid problems such as these. If you already have problems, then knowing about them in advance will give you sufficient time to develop viable solutions to correct them.