For today’s job-seekers, the job search isn’t as simple as it used to be generations ago. Back then, a decent resume and solid recommendations were often all a qualified candidate needed to secure a good job. These days, readily-available information networks and reasonable liability concerns often prompt employers to more thoroughly research potential hires. For many candidates worried about employers checking credit scores, that can lead to one question: can bad credit affect the job search?
Why Would Employers Check Credit?
Of course, you might be wondering why an employer would be checking credit scores in the first place. The answer typically involves concerns about potential fraud or theft. Credit details can often provide an indication that a potential hire may be in financial trouble. Unfortunately, that can lead to fears that a desperate employee might resort to embezzlement, theft, or other crimes to ease his financial pain.
Some signs of potential financial distress could include:
- A history of consistent late payments, indicating financial instability or even irresponsibility
- Evidence of an inability to manage money, which could be a concern if the company deals with financial assets or data
- Excessive debt can be another sign of irresponsibility, or even a lack of impulse control
Checking Credit Scores: What Employers See
So, what do employers check for when they run your credit history? Well, as it turns out, an employer credit check doesn’t actually yield access to your credit score.
Instead, the 25% of human resources personnel checking credit scores see a summarized credit report that has been modified to comply with federal law. He or she won’t see any of your personal account numbers, your credit score, or other details that could violate regulations governing equal employment opportunity.
However, those employers can see:
- The amount of money that you owe
- Your payment history
- Your total amount of available credit
The good news is that your credit score isn’t impacted by employers checking credit scores. It’s considered a soft inquiry, so no point are lost due to the check. It’s also worth noting that employers can only check your credit with your consent.
They’re also required to notify you prior to rejecting your application based on credit information. You can be denied a job due to bad credit, but you have to be given an opportunity to explain or correct any credit report mistakes.
Can You Get A Job with Bad Credit?
The reality is that most employers are not checking credit scores, and only about 6 percent check every candidate’s credit. As a result, most people can get a job even with bad credit. However, if you are looking for a job where money management skills or a security clearance are needed, your credit should be a concern. To avoid complications in your job search, it’s smart to head off any problems before they raise red flags. You should:
- Get a copy of your credit report and check it for accuracy. Use the designated dispute process to contest any inaccurate details.
- Focus on paying all your bills on time. In many instances, late payments are the biggest red flag and seen as a sign that you’re not responsible.
- Don’t max out your credit. When employers are checking credit scores, maxed out credit is a real concern. Besides, using more than 30% of your available credit will drive down your credit score.
- Regularly monitor your credit score and report. There’s a lot of identity fraud out there, and companies do make mistakes. Only regular monitoring can help you prevent unforeseen credit problems.