Is Your Bad Credit Keeping You from Getting Hired?

by Staff - Original publish date: July 22, 2013

If you’re like most people, your credit rating is probably the last thing on your mind while looking for a new job. Maybe you’re taking a second or a third look at your resume and cover letter, or having a friend or expert review or revamp them. You may even be taking a closer look at your wardrobe. But according to analysts and experts like Michael Germanovsky, editor-in-chief at who was our "go to" expert for this article, your credit rating should definitely be on your mind if you want to get hired. 

In reality your credit score can play a very real role in whether or not you get your dream job. This is especially true if the job in question works with money on Wall Street, in a bank, or in another finance related field -- or if you’re working with jewelry, or other high-end merchandise. In those sectors, they often do a credit check right along with a background check. When you sign on the dotted line, you may not realize you’re authorizing a credit check, unless you read the fine print. According to federal law, individuals in the pre-employment process must give their prospective employer permission for not only a background check, but a credit check as well. So it pays to read exactly what it is you’re signing. 

It’s easy to assume potential employers are looking to have a "gotcha" moment, but that’s not normally the case. Most of the time, at this point in the process, they want you and are hoping everything comes back good, or even great, so they can hire you. Its simply standard operating procedure for many companies to do a credit check, along with checking out your work and education references, or even doing a drug test or checking to see if you have a criminal history. It’s really just that simple, so don’t take it personally. 

Why does your credit rating count? Employers in the financial sector often use it as a part of the pre-employment screening process to check out an individual’s character, decision-making skills and of course as a way to measure whether or not they can handle money. It can also be used to make sure new employees aren’t distracted, or stressed out, by financial issues. If you’re going to be working on Wall Street or in a bank, they often want to make sure the people they hire are dependable, and a high debt-to-salary ratio can be construed as a sign of unreliability.

The rule of thumb when it comes to the numbers is that they are usually looking for a credit score of 750 or better when considering a candidate for employment. If you haven’t done so already, you may want to check to see what your credit rating is. It won’t hurt your credit and it’s usually free. In the end, it may actually help your credit score to get this information because if there are any problems you can deal with them sooner than later.

There are three agencies authorized to provide credit reports -- TransUnion, Experian and Equifax. Each agency has a website where you can request a copy of your credit report. When you get the report back you may let out a sign of relief when you find out that your score is 750 or more, but what if it’s not? Well, there are five practical ways you can turn things around and recover from a bad credit score:

  1. Narrow down your debtors
  2. Sort out your payments
  3. Spend less on credit cards, and use cash when you can
  4. Pay extra each month on your credit cards
  5. Dispute any negative information on your credit reports

While some of these techniques may take a bit of time to sort out, it’s well worth the time and the effort. By getting your credit score back on track you can not only increase your chances of getting the job you want, but you’re also getting your financial life back on track. 

Don’t feel bad if you didn’t know that your credit rating could be a pre-employment issue, you’re not alone. According to a recent study conducted by Visa, 80 percent of Americans didn’t know either. But now that you do know, you can take steps to make sure it’s not going to be an issue.