Is a Bad Credit Rating Preventing You From Landing a Job?

creditYou lose your job. The bills are rolling in. You start falling behind in your payments, robbing Peter to pay Paul. You try to find employment so you can climb out of your deepening financial hole; you secure a job interview, make it to the next round and then to the final interview ... and then you get the golden ticket -- the job offer. But not so fast. The offer is contingent on a background check that includes a credit check. Now what?

According to a 2010 study by the Society of Human Resources Management, 47 percent of companies conduct pre-employment credit checks on some candidates and 13 percent conduct them on all candidates. Credit checks may be performed to reduce or prevent theft or embezzlement, to minimize legal liability for negligent hiring or retention, to assess overall trustworthiness of job candidates, or to comply with state laws. So what type of applicant is most likely to be subject to a credit check?

Annie Hoffnung, an HR director who has worked for insurance, investment banking, and public relations firms, says that "anyone with financial-services responsibilities may be subject to a credit check." Other experts say that credit checks are now routinely being done on HR and health-care professionals who have access to personal information -- Social Security numbers, birth dates, and addresses -- that could be misused to steal someone's identity. A person in IT at an e-commerce company might also be screened, as they would have access to customer credit-card numbers.

Companies using a consumer reporting agency to source credit information must adhere to Fair Credit Reporting Act compliance, including disclosure and authorization, certification, and advance notice of adverse action. The employer must provide written notice to the applicant explaining that an investigative consumer report will be obtained and secure the applicant's signed consent. The request for a credit check is often disclosed in the applicant's offer letter but may be addressed before the offer is made.

OK, so now you have a good idea whose credit might be checked and what your rights are. But what can you do if you have a less-than-perfect credit rating?

Be prepared to explain your credit history.

Poor credit can happen for many reasons. If your credit history was compromised by a financially draining divorce, unplanned medical expenses, lost bills, lack of credit history, or even identity theft, explain your circumstances. Sixty-five percent of the companies SHRM surveyed give candidates the opportunity to explain their credit history.

Bring the focus back to the value you can bring to the company.

Focus on selling your candidacy, showcasing strong employment references, proving you are responsible and trustworthy, and building rapport with the hiring manager. According to management development consultant Joni Daniels, "the perception may be that if you can't handle your money/bills perfectly, you can't handle anyone else's. But bad credit has nothing to do with honesty or the ability to perform well in a position that requires dealing with financial matters."

Ask questions.

An employer can rescind an offer due to poor credit history, but the employer is required to tell you if that was the reason for the rejection and show you a copy of the credit report they used to make their decision.

Explore compromises.

Some employers may be willing to extend a job offer to someone with credit issues with the understanding that they have a defined period of time to clean up these issues.

Make sure the report is accurate.

In addition, you should obtain a free copy of your credit report. According to Pricewaterhouse Coopers Certified Financial Planner and credit reports expert Gregory McGraime, "one out of five individuals has a serious error on their credit report and does not even know it. It can take 30, 60, or 90 days to get corrected, so this is not something you want to delay doing."

See Also: 4 Tips for Getting a Job With Bad Credit >>

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Very good article and such a sensitive subject. It is really a shame that so many people want to work to "repair" their credit, but yet employers refuse to us. Like many others I have great credentials, but getting a job has been a straight nightmare. I (like others) maintained good/great credit rating until we found ourselves in an unfortunate situation. Of course the creditors have NO sympathy, but it is really unfortunate when the employer can see that (1) you are in a financial crisis, and (2) you ARE doing all that you can do--seek employment. Wow! But rather than help those who NEED help, they hire someone who is already employed...just looking for a different position.

April 23 2010 at 2:13 AM Report abuse rate up rate down Reply

I too am a VICTIM of "Credit Discrimination" and did not get a job even though I went through 3 interviews with the company only to be rejected at the last moment.

I called the companies HR department and asked why I was not eligible, considering that the "boss" had already told me I was the best candidate.

When called, the HR Department head chuckled and told me my credit was obviously bad and they were not inclined to offer me a job as a result of my credit score.

I contacted the ACLU in California regarding this "Invasion of Privacy" issue but as typical, they never wrote me back nor were they interested in "looking into the issue".

I have bad credit, excellent job history (with commendations) and still I was denied.

This is pure discrimination as my credit records are MINE and not for everyone to pick through.

So where do we people have to turn in this time of economic crisis ?

Talk to or write the ACLU in your area. Maybe (and I do mean MAYBE)someone will look into this "discriminating practice".

Welcome to America ... Illegal’s are finding jobs everywhere, yet an American Citizen can be (and are) being discriminated by "Big Brother".

Sad day when your credit is the defining matter when all you want to do is WORK !

February 27 2010 at 7:08 PM Report abuse rate up rate down Reply

If you have a creditor or CRA taking beyond 30 days or not correcting errors, sue them. Use your local courts. They will fix the matter right away and you will be able to get a settlement. It will cost the CRAs and creditors lots of money just to fly their attorneys to your location

February 27 2010 at 7:06 PM Report abuse rate up rate down Reply

Die, site spammers, die. We have to wade to their worthless dribble stories to their worthless sites, to get to read what intelligent people have to say and their input on this sensitive and informative article. It has happened to me too! It doesnt make one feel good if you have good credentials. We cant fight the economy, but just struggle to get back up. Wonder what my Chapter 13 looks like on a credit report :(

February 27 2010 at 7:02 PM Report abuse rate up rate down Reply

This is just another way to keep people unemployed. I am of the opinion that many people in business have the socialist attitude "let the government take care of them". No longer are work qualifications, education and experience are of most importance. Now we have HR people running credit reports and looking people up on the web instead of reviewing work credentials.

February 27 2010 at 6:58 PM Report abuse rate up rate down Reply

I bought an excellent book about credit many years ago from ableconsumer. It rocketed my credit scores. Dunno if it's still around.

February 27 2010 at 6:43 PM Report abuse rate up rate down Reply
John g

Dont you think most people are applying for jobs in order to pay off their debts, this is really an invasion on ones privacy.

February 27 2010 at 5:29 PM Report abuse rate up rate down Reply
1 reply to John g's comment

You are so right. Your laid off, and these people that tellme your getting unemployment, yes I am but no one can live on $405 a week, pay your mortgage/maintenance fees, utilities, food and whatever else are necessary expenses. So people need to find a job in order to get back on track. It's awful, a credit score determines your ability to handle a job. It's unfair with the economic situation the way it is.

April 18 2010 at 12:54 PM Report abuse rate up rate down Reply

last i heard this is still america innocent until proven guilty this is the biggest bunch of bs i ever heard of if your credit is bad that makes you a theif is what they are saying it should be illegal our great leaders should grow some balls and protect us from that crap

February 27 2010 at 5:26 PM Report abuse rate up rate down Reply
Jeanne Gabel

Your credit history should only be looked at in order to get credit! It's way out of control how every Tom, Dick and Harry can pull up your credit and everytime someone pulls up your history it looks bad on you because it is recorded like you were trying to get a loan or credit for something! So it hurts you even more!

February 27 2010 at 5:21 PM Report abuse rate up rate down Reply
None ya

Its none of anyones business and i mean anyones what your credit score if you dont want them to know. Many reason why you could have bad credit etc, Why should you explain your life and its circumstances to a stranger. This is pathetic! damn it pisses me off...

February 27 2010 at 4:34 PM Report abuse rate up rate down Reply

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