Bad Credit Can Cost You . . . Your New Job

Hi Anita,

I just came from a job interview where I was asked to sign a form permitting the company to run a credit check and I’m really worried this will cost me the job. I’ve been out of work for several months and have been living on my limited savings and credit cards (which have all been maxed out). I’ve paid many of my bills late and my credit scores continue to fall. Is there any way to fix the situation and not lose my chance on getting this job?

Dear, Concerned about Credit,

I certainly feel your pain. Getting rejected for employment based on your credit report begins a cycle where nobody wins: you lose a job, which hurts your credit, which prevents you from getting another job, which only pushes your credit further into the dumps.

Yikes!

In an effort to stop this insanity, state governments are starting to step in and restrict or prohibit employers from using credit reports in making hiring and other job decisions. Ten states have passed these laws so far, and more are considering similar legislation.

Key to SuccessThe Federal Fair Credit Reporting Act protects the privacy and accuracy of the information in your credit report, requiring employers to get your written permission to conduct the check. Can you refuse? Yes, you can. But you really don’t have much choice if you want the job.

So why are credit checks run in the first place? Well, it does make sense in some cases. For example, a company may not want an employee who never pays bills on time to manage a department budget, prepare economic forecasts, or have free access to a company credit card. Some employers firmly believe your credit report reflects your ability to be responsible and diligent – two attributes most companies like to see in their employees.

Let’s take a closer look at your dilemma. Late payments and maxing out your cards are definitely red flags. But the fact that prospective employers must get your consent before they pull your report at least gives you the opportunity to explain. Use it.

Now listen up… be proactive and honest. If you are, nine times out of ten, the interviewer will not see a low score as an indication that you’re irresponsible but rather as simply an indicator of your circumstances.

Think about it. Are most employers going to tell you that it was the credit report that caused them to hire someone else? It’s easier to find another excuse or not give one at all.

So tell me, dear readers, have you been turned down for a job and think it was the credit report that broke the deal?

Best wishes,
Anita

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14 Comments (+add yours?)

  1. anitaclew
    May 01, 2015 @ 09:52:59

    New York City has just outlawed the use of consumer credit reports as discriminatory: http://www.jdsupra.com/legalnews/new-york-city-will-prohibit-most-employe-35413/

    Reply

  2. Angie Pittard
    Aug 12, 2013 @ 04:41:27

    Which states have it outlawed?

    Reply

    • anitaclew
      Aug 12, 2013 @ 17:02:45

      Great question, Angie! Following are the nine states that have already banned employers from running a credit check on a prospective hire: California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont, and Washington. Nevada’s ban will go into effect this October.

      Reply

  3. Robin
    Jul 24, 2013 @ 16:07:50

    I lost a very good paying position 7 years ago, went to school 2 years (for my degree) and was primary caregiver to a very ill relative until their passing, held several PT/temp positions, found permanent PT position in retail, currently I am FT with the same employer. The funny thing is I am in retail after a successful career in distribution and a 3.8 gpa. I have been unsuccessful at bids for distribution or supply chain positions even though I have the abilities, experience and past success to be a viable candidate.
    I really do believe that my credit is a primary reason for this.
    What that credit score does not show is that I went from a job at over 50k/year to half that amount in a short period of time. My home is still mine, my vehicles are paid for, I still have my utilities, and I pay my taxes. I have no life but my financial responsibilities are being met although late at times.
    I find it appalling that the companies hiring are able to judge you based on automated application testing and credit report numbers.
    What I find amusing is that I am bonded!
    In all the time I have applied for positions I have made it to actual in-person interviews only 4 times!
    Later we could talk about the on line job services out there…really? I get offers for jobs with Avon or some spam-scam email from a company asking for money.

    Reply

  4. LindaLou
    Jul 24, 2013 @ 05:12:37

    I am 57 years on this earth and have just completed two years of college for a Medical Biller and Coder, I had some medical issues during school, without insurance or funds to pay for treatment in hospital, the bills went to collection and has effected my credit. Now that I’m looking for a job, they are checking my credit and I know I’ve been looked over for jobs because of bad credit. I have student loans to pay off also, how will I do this without work?!!

    Reply

  5. terrie
    Jul 23, 2013 @ 15:27:27

    Dear Anita
    I just read yr comments on running ones credit while trying to apply for a job. I think this is why the last yr I cant find a job. I have bad credit due to a nasty divorce. I dont know how to fix my credit. I may have to file bankruptcy. Will this hurt my chances of employment even further? What would u suggest I do?
    Thank you for yr time and help in this matter, Terrie P.

    Reply

  6. dlt4you
    Jul 23, 2013 @ 14:39:49

    Hello, I have a question

    Sent from my Samsung Galaxy Note® II

    Reply

  7. Christopher
    Jul 23, 2013 @ 10:38:53

    In my case, yes. A telemarketing agency here in CO literally sent me an email saying that my job offer was revoked due to low credit score. I am sincerely hoping that Colorado becomes one of the states that passes legislation for protection, but i also can agree that some circumstances should be exempt for company security.

    One point i did not see in the article, but one I have observed in 17 years as a security professional, is that in SOME cases (I emphasize “some”) for certain jobs, bad credit, high debts, etc. are a red flag which can indicate higher risk of theft. Companies definitely do not want to leave someone alone in charge of their physical assets if they are more prone to do something rash in an effort to live an easier financial life. So in the case of Security Officers, inventory management professionals, or anyone else who may be the sole person of access and responsibility for expensive company assets, I can definitely see the reason for checking every bit of a background – including Credit Checks.

    However some of these checks are just way out of line. One of the local fast food franchises here does credit checks . . . for a crew member! Really? Why would someone need good credit to flip burgers? This makes me think that some companies, in an effort to avoid discrimination laws, etc. due to the economy and a way to turn away more applicants, abuse such a system. So, yes, I have seen this happen and hope that legislation starts to appropriately monitor and filter such use of a credit report for employment.

    Reply

  8. Y Lewis
    Jul 23, 2013 @ 09:29:49

    I have had experience in the past where a credit check was ran and I was questioned about it……didn’t get the job.

    Reply

  9. Jessica
    Jul 23, 2013 @ 09:16:11

    I had two jobs that I did not get because of my horrible credit. One of them told me that was the reason as the job would be working for a credit card company. The other was really excited to have me and was fill speed ahead in the process until after the credit portion. Once I approved the credit check all correspondence stopped.

    Reply

  10. Rafael Bruce
    Jul 23, 2013 @ 09:10:24

    I hope it doesn’t cost you your new job.

    Reply

  11. Mark
    Jul 23, 2013 @ 08:42:40

    Yes, I had three interviews for a job I was highly qualified for and would have been an ideal job for me. As part of the interview I was asked if I had good credit. Of course I was honest and said it wasn’t the best and based on how well the rest of the interviews went I can only deduce that my bad credit was the reason I didn’t get the job. I can understand the reasoning but think it’s still very unfair. Next time I’ll lie about it!

    Reply

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Disclaimer

Anita Clew's blog posts are intended for general guidance and should never be taken as legal advice. In all instances where harassment, inequity, or unfair treatment is believed to be present, please consult your HR Department or legal representation.
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