Employment Credit Check: How Bad Credit Affects Your Job Search

Written by
Rebecca Smith

Published
Oct 16, 2018

Oct 16, 2018 • by Rebecca Smith

The Bureau of Labor Statistics reported that as of July 2018, there were 6.9 million job openings in the country. That means that at the moment, there are enough jobs for the 6.23 million unemployed!

The thing is, there's a lot that goes into securing gainful employment. Of course, having quite the impressive resume gives you an edge over the competition. But did you know that your being one of the 220 million credit file holders in the U.S. can also affect your chances?

That's because some employers need to run an employment credit check on applicants. It may not be completely the same as the ones used by loan lending institutions. But the report would still show potential employers how credit-worthy you are.

Why in the world do employers do this though? We'll cover the potential reasons they may have in this post, so keep reading to find out!

What an Employer Credit Check Tells Potential Employers

There are many reasons job seekers don't get the job they've applied for. It may be that they don't have what employers look for, or someone else is a better fit for the position. It's also possible that they didn't dress to impress.

Either way, it may take up to 24 rejections before you hear that sweet "yes".

But this doesn't mean you can't blame your poor credit. Especially if you're applying for a job that entails making financial-related decisions.

Certain industries put serious consideration on applicants' credit score and employment-worthiness. There's the banking and finance industry, for starters.

There's no doubt that this field is credit score-sensitive. It makes complete sense, seeing as most of its operations are financial-based. That said, employers want to make sure their people are financially-responsible.

Remember, your credit report shows how financially-responsible you have been. It also gives a sneak peek on how you manage your finances. Furthermore, it tells potential employers where your organization abilities stand.

An Indication of How Trustworthy You Are

One of the primary reasons for a credit and background check is to gauge a person's trustworthiness. How so?

Remember when you signed that contract on a loan? Didn't you agree to make payments towards it every XX of the month?

In essence, that was you asking the lender to put their trust on you. To trust you that you'll repay them back whatever you owe them.

So, it says a lot if your credit check report shows multiple missed payments. Potential employers can take those as a sign you've breached trust before. They may think that, if you did it before, there's a chance you'll do it again, this time, with them.

The Connection between Your Credit and Your Organizational Ability

Employer credit checks tell employers how you make financial decisions. If it shows them that you always pay your bills on time, they'll take it as a sign of responsibility. If you don't go beyond your limits, they'll consider it as proof of your organizational ability.

Imagine then what potential employers will think if your report shows late payments. If it shows overdue and unpaid financial responsibilities or purchases beyond your limits.

They likely would think you have poor organizational abilities. They have reason to believe that you're not financially-responsible. As such, this can lead to them being hesitant to hire you.

This is especially true if you're applying for the role of a financial consultant or analyst. You may also have a hard time getting a job as a financial management in this case. After all, these professions require smart money management skills.

Poor credit doesn't exactly signal exceptional financial management abilities.

A Sign You May Be a Financial Risk

Consider this for a minute. Would you ask someone to handle your finances even if they made bad financial decisions in the past? Would you give someone access to your money after finding out they're in huge debt?

You most likely wouldn't, would you?

It's pretty much the same for employers. In fact, they have the right to even be more cautious, since there's a lot more money involved.

As such, they may choose not to hire you if they see red flags in your credit report. These may include poor repayment history, delinquent accounts, and huge monthly payments. This is especially true for jobs that have access to company finances.

Note that if a company rejects your application based on the credit report, they need to give you a copy of it. It should also come with a "Summary of Rights" report. You'll find the contact details of the report provider in these documents.

It's a good idea to contact the company responsible for the credit check report. This way, you'll have a better understanding of what cost you your employment. By knowing how your credit affected you, you can then start making improvements to it.

Do All Employers Run Credit Checks?

Note that employers in most industries may now run credit checks on applicants. So, it's not only banking and finance jobs where your credit score has a role to play. It may affect your employment, regardless of the industry you want to work in.

Keep in mind though that they'd need your written permission first before they can run a credit check. Also, just because they may request for a preemployment credit check doesn't mean they will. It still depends on the type of work you'll do for them.

But then again, that shouldn't stop you from doing what you can to improve your credit. The Credit Review offers some tips on how you can use loans to pull your credit score higher.

Don't Let Your Credit Ruin Your Employment Chances

Now that you know how an employment credit check can affect your job search, next is to work on your credit. Start by requesting a free copy of your credit report. This way, you can make sure there are no errors in it, and you'll also know where your credit stands.

Equipped with this knowledge, you can then start polishing your credit. Not only will it help you with your job search; it'll also help raise your odds of loan approval. This will be quite useful when you decide to become your own boss and would need a business loan.

While you're here, why not read up on more job-seeking tips and tricks? We've got more of them that'll help you rock those job interviews!