I want a new job. Will bad credit stop me?
Your credit could, in some cases, affect your job prospects.
- Lots of people are looking for a job these days.
- Although employers don’t automatically check your credit as part of the application process, some might.
The US economy is full of jobs right now, so you may be motivated to get a new one – a role that pays better and offers more opportunities to advance your career.
While a resume is always essential to your application process, it’s not the only document a hiring manager might look at. Some employers require a more thorough background check which might involve a credit check.
Could bad credit be preventing you from finding a job?
Having a low credit score could result in you being denied a mortgage or a credit card. The good news, however, is that a potential employer usually won’t see your credit score. This is because an employer can pull a copy of your credit report, but that report, ironically enough, will not contain your score itself.
That said, your credit report may contain information that makes an employer reluctant to hire you. Suppose your credit report shows that you are overdue on various bills and you have a large number of open credit cards with balances on each of them. It could indicate that you haven’t been doing the most ideal job of managing your personal finances.
Now you might be thinking, “Why does my employer care if my personal finances are a little sloppy?” And in some cases, your employer might not care.
Suppose you are applying for an IT job that requires you to be good with computers and networking. In this situation, negative activity on your credit report is less likely to impact your ability to find a job, since the job in question does not require you to manage money. In fact, in this case, your potential employer is less likely to check your credit report.
But if you’re applying for a job in accounting, bookkeeping, or any other role that heavily involves money management, negative activity on your credit report could serve as a red flag. And if you’re wondering if it’s legal for an employer to reject your job application based on information in your credit report, the unfortunate answer is yes.
Some states, however, limit employers’ ability to use credit checks in hiring decisions. These include California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington.
It should also be noted that Delaware only prohibits public employers from using credit report information to make hiring decisions. And some cities, like Chicago and New York, have their own rules that say employers can’t use credit checks for hiring decisions.
Will you know if your credit report is a problem?
When employers check your credit as part of their screening process, they’re usually required to tell you if you’ve been rejected for a job based on your credit history. From there, you should have the option to respond to that decision. If you have a history of overdue bills or large credit card balances due to a recent illness that prevented you from working, for example, this is something that might cause an employer to reconsider once you gave this explanation.
Either way, if you’re applying for jobs that require you to manage money, it pays to check your credit report first and make sure there’s no red flag. alarm or try to remedy any negative activity you see. It’s also a good idea to be on the lookout for credit report errors, such as overdue debts that you never accrued. Correcting the mistakes could save you from being rejected from a job in the first place – and it could also put you in a stronger position to qualify for a new loan or credit card when you want it.
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