Could Your Debt Lose You a Job Offer?

Oct 04, 2011

Employers researching the history of potential employees is nothing new: background checks, especially for criminal activities, have long been a staple of the job hunt. But a new kind of check has infiltrated that process for many employers: the credit check. Why do employers care about your credit history, and what can you do about it?

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By Eric Garneau


What Does Credit Matter?

To many jobseekers, it may seem counterintuitive that potential employers would want to know your credit before they hire you. After all, you have to have a job to get paid, and you have to have money to maintain good credit. Perhaps even stranger, it's not unheard-of for your current employer to re-check your credit before considering any promotions or other moves within the company.

To employers who do look at your credit score, though - and a 2010 CNN report puts that number at 60% - your credit says a lot about the kind of person you are. Your bosses want to see that you're a responsible individual who doesn't live too far beyond your means. They also want to know that you won't be distracted by being too heavily in debt, that you can focus on the work at hand and not on financial difficulties at home.

For some, credit checks also provide helpful verification for items you put on your resume, including your name, address, social security number and places of previous employment. In a world growing more and more focused on security, it's no wonder that some companies would look to third-party sources for verification of your resume instead of your personal references.

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A Major Stumbling Block

Of course, one's credit history isn't totally indicative of a person's responsibility - especially not in a tough economy. Someone may have bad credit because they spend their money wantonly, true. They may also have bad credit because they've fallen on hard times and literally cannot afford to pay their bills, no matter how responsible they are. That's a problem that compounds itself the longer that someone's out of work, and it seems like a cruel joke that merely being unemployed would lead to further unemployment.

Employers who do check your credit, of course, want to stress that such a case isn't totally likely. Other things still take precedence, they say, such as criminal records or misrepresenting one's experience on a resume. However, the credit check might work to give someone an extra edge or disadvantage when in competition with other job candidates.

The key, as several sources stress, is to let your potential employers know about any credit issues before they run the check - and by law, they're required to obtain your authorization before they do so. If you can satisfactorily explain why there are dark marks on your credit history, you probably stand a better chance of obtaining that job than a candidate who lets that history speak for itself.

Federal law also requires employers who reject you on the basis of your credit to inform you of that decision and to provide you with the offending credit reports upon your request. Of course, there's no guarantee that your interviewers will be quite so forthcoming, but they're supposed to be, and if there's any silver lining in that situation, it's that you can see why your credit's less-than-perfect and possibly take steps to rebuild it.

For some positions, especially those where your ability to manage finances is paramount (jobs in a bank, for instance), credit checks may be totally justifiable. For many jobs, however, they seem like a nuisance, a needless worry that jobseekers shouldn't have on their plates, especially in a difficult economy. However, a little preparation can go a long way towards easing the pain of having employers scrutinize your financial history. That said, in a perfect world employers would hire you based on the work you can do, not the money you don't have. Hopefully some HR managers out there feel the same way.

Are you a college student looking for some work to fit in your schedule? Check out these flexible jobs.

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