Why Do Employers Care About Your Credit?

Bankruptcy on your credit report can hurt your chances of getting hired, experts say.


  • More companies doing credit checks on potential employees
  • Accountants, banks, brokerage firms are among those looking for money problems
  • Federal law requires the hiring entity to provide a copy to the job seeker
  • Proactively address your financial issues before the business takes an audit

(CareerBuilder.com) – When looking for a job, you probably don’t think about your credit score. But you might want to start.

Although many people argue that credit scores have nothing to do with their ability at work, some employers say otherwise. Sixty percent of employers recently surveyed by the Society of Human Resource Management said they perform credit checks on some or all of potential new hires. This represents an increase from 43% in 2006 and 25% in 1998.

Opinions on whether this is fair or not vary. Supporters of credit checks don’t think it’s any different from checking a candidate’s reference. But naysayers see it as unfair – especially in this economy – because medical issues, a divorce or layoff and the resulting missed bills can ruin an otherwise perfect credit score in an instant.

“There are a lot of good reasons not to hire someone. Usually bad credit alone is not one of them. And yet, it has become the reason of the day to disqualify an otherwise highly qualified person from doing so. a job that suits him particularly well for, ”says Milan P. Yager, President and CEO of the National Association of Professional Employers’ Organizations.“ As the fields of employment become closed and increasingly competitive , you can bet more employers are using credit check options than ever before. “

So why do employers review your credit history?

The reasons vary. Sometimes this can be due to the nature of the position you are applying for.

Video: Credit Report Errors, Education Savings

“Certain categories of employers regularly review credit history [such as] banks, brokerage houses, governments and other financial institutions. The credit history assessment is [also] frequently applied to accounting and financial management positions where there is potential for fraud and embezzlement, ”says Wendy Powell, author of“ Management Experience Acquired ”.

“Employers have a responsibility to ensure that proper due diligence is applied. Be prepared for the possibility of a credit check, not only in the application process, but also throughout the employment relationship.” , she says.

Other employers review credit history in order to separate one candidate from another.

“The credit report information is a great data point for comparing and opposing two or more applicants for the same position,” said Jay Meschke, president of EFL Associates, an executive search firm. “If, for example, a candidate reports a significant level of personal debt or credit defaults that could distract that person from their professional responsibilities, a hiring entity may take this information into consideration when comparing such a candidate. to another comparative candidate without such distractions. “

Or maybe a company just wants to get a better idea of ​​who they’re considering hiring.

“Financial reporting may not be an employer’s priority. Making sure your employees are accountable and ethical is a must,” Yager says. “Relying on character references becomes less reliable than checking records and screening workers beforehand. It is true that credit checks can verify demographic and location information. They will include identifiers such as name, spouse, social security number, alias, address, telephone, and previous employment. “

Barry Maher, author of “Filling the Glass,” adds that a credit report can provide insight into the economic life of a person who can confirm or contradict the resume.

“Maybe someone claims to have earned a good six-figure income in the past 10 years, but is showing repeated credit problems during that time. Are they lying about their income? fund managers? Do they have a major financial problem that is draining their resources? Any of them could (or not) have a negative effect on their work. “

The Fair Credit Reporting Act governs almost all matters related to the use of credit reports. Job seekers have the right to obtain a copy of their credit report, and the law requires the hiring entity to provide a copy to the job seeker. Additionally, if an employer decides not to hire a candidate based on the results of a credit report, the candidate should be informed of the reason and be given the credit report information.

Job seekers should be prepared to deal with a potential employer by looking at their credit report.

If you have a less than stellar credit score, here are three things you can do:

1. Be prepared for the exam

“Just like you would if you were showing your home to a potential buyer, clean up your credit report before you put your career on the market,” Yager explains.

“Know your credit score and examine your credit report. If there is an error, US residents can visit the Federal Trade Commission website to learn step by step how to dispute and correct the error. solution that instantly increases your credit score, so have a little patience. “

2. Raise the issues yourself

“As a candidate, if you have credit issues and the company asks permission to do a credit report, you’re much better off if you proactively raise issues that they’re likely to uncover,” by making your side of the story known. before the company even realizes there is a story, ”says Maher.

“A lot of people have problems with their credit, especially nowadays. But you have to control the story, not let the credit reporting company control it. Hiring companies understand that no candidate does. is perfect, but they want to understand this imperfection, whatever it is. “

3. Realize that you are not alone

“In most cases, a deterioration in credit history is a slow process and would most likely affect applicants who have been out of work for the longest time,” said Powell.

“Remember, if your credit history has been damaged, you are in the same boat as countless job applicants. And don’t forget, it’s a huge boat. Employers have a responsibility to hire the best and most qualified candidate. Be prepared and have a plan. “

& copy CareerBuilder.com 2011. All rights reserved. The information in this article may not be published, broadcast or otherwise distributed without prior written permission.

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