It is getting harder for me to find employment since my credit is bad. How do they expect to fix my credit if no one wants to hire me?
CREDIT CHECKS | Employment or No Employment
I've briefly talked about this in the past, but I want to discuss this again because I've seen others get frustrated over this particular topic. I personally don't agree when employers check credit to base an employment decision but I understand why it's done and sometimes required. Not everyone can maintain their credit standing, especially in situations where their credit is already in the negative standing.
Q: Why do employers check credit history? A: Employers use credit reports to judge how responsible and financially stable you are. The results of a credit check can hinder your chances of getting a job offer if your credit report isn't top-notch. Employers can, with your permission, check your credit history as part of the job application process and what they discover can be an issue for job seekers. [Note]: Those who are 20-somethings, I'm talking to you. It's best to learn financial responsibility because as you get older, credit is everything and determines what you can and can't do from getting an apartment to getting a vehicle or other that requires fair/good credit standing.
What Employers Can – and Can’t – Learn From a Credit Check
Your credit score and credit report are not interchangeable, even though many people use them that way. Your credit score, the three-digit number that signifies your loan-worthiness to lenders, is not part of the report that’s available to prospective employers. So, when you authorize a credit check, you’re not sharing your digits, so to speak.
Of course, there’s a lot that employers can learn from the employment-screening version of your credit report, even without that score. That includes how much credit you have, how much credit you’re using, and whether you’re habitually late with your bills. In short, employers get all the information that goes into making up your credit score, but not the score itself.
However, they can’t learn anything without your permission. Before a company can run a credit report for employment purposes, they must notify you in writing and get your written authorization. As of 2017, ten (10) states go even further than that, limiting the degree to which employers can use credit checks in making employment decisions.
For example, California prohibits employers from gathering credit information for the purposes of making hiring decisions, unless it’s for specific jobs, including managerial roles, law enforcement jobs, or positions with the state department of justice.
Credit Report Red Flags
What items in your credit report could be a problem when it comes to getting hired?
There are several red flags that employers are going to pay attention to if they run a credit report and use it as part of the decision-making process.
Ken Lin, CEO of Credit Karma, shared information with The Balance on the items in a credit report may appear as red flags to employers. These red flags include:
• Liens - Any type of lien against you could be a sign of irresponsibility. It suggests to employers that you weren't responsible enough to pay off your debt or negotiate a settlement. • 100 Percent Credit Utilization - This shows employers that you're in over your head and can't stick to a budget. • Bankruptcy/Foreclosure - Again this shows a lack of responsibility for things you're committed to. To an employer, this could suggest that you'll bail on large projects and aren't resourceful enough. • Recent Late Fees - Recent 30-, 60-, or 90-day late fees show finances are causing you significant stress. [Tip]: I briefly talked about this in a previous post. See: Observation(s) Struggle - Information via Jobcase
This activity may appear as more of a red flag for financial positions because it suggests you have trouble budgeting.
• Significant Activity - A recent opening of several new accounts or closing of several accounts could appear as a red flag. Significant new activity may trigger employees to think you are desperate and need extra credit because you are in over your head. • Closing several accounts could appear as a sign that you aren't good with money and don't know how to avoid charging up a large sum of debt.
What to Do If You’re Worried About a Pre-Employment Credit Check
• Familiarize yourself with your credit report. Under the Fair Credit Reporting Act, you’re entitled to a free credit report from each of the three major credit reporting agencies every 12 months. These reports contain similar information to the employment-screening report that would be available to a prospective employer. (You can also get your free FICO score, but that’s less relevant to your employment situation.) You can also pull a credit report via Credit Karma (it is FREE). • Fix anything that’s incorrect. A 2012 study from the FTC found that one in five American consumers had an error on one of their three credit reports. Five percent of consumers had an error that was serious enough to lead to them paying higher rates on loans. It’s possible that a mistake is all that’s standing between you and getting hired.
• Don’t be scared off by a potential issue on your credit report. What seems serious to you might not phase an employer. Or, you might be able to provide a reasonable explanation for a negative item and convince the hiring manager. Finally, if you think the employer is using credit reporting as a cover for more discriminatory practices, don’t hesitate to contact the Equal Employment Opportunity Commission (https://www.thebalance.com/what-is-the-equal-employment-opportunity-commission-eeoc-2060496). They can determine if the employer is using credit reporting as a viable part of its screening process related to business necessity.
I hope this information helps anyone and everyone that's encountered lack of employment due to credit issues. As a reminder, this is why you need to read the FINE PRINT/information presented upon an employment offer when agreeing to allow a background check. It's usually stated in writing what information will be reviewed during your background check, and a lot of the times your credit/financial history is included. It's often that one will not see this and automatically agree in the excitement of a potential job offer that they do not realize they've agreed to a credit check. As additional clarification, it's best to ASK your potential employment IF a credit check will be included with your background check, and if so will credit determine an employment decision.
I got a job offer and start next month contingent on background/credit check and drug screen. Not worried about background or drug screen but credit is not wonderful since I have been out of work since May. Hoping the job goes through.
I rarely comment on Jobcase, but I want to say this "I think it is very UNFAIR that a company seeking qualified candidates and makes a decision to not hire you based on your credit report". There are too MANY qualified applicants who have had a financial setback for what ever reason and have the ability to fix it, but CAN'T due to not being offered a job due to their credit report. All of you companies who pass up on qualified applicants due to their credit score, remember one thing, it is NOT their credit score who does the work you need to have done, it is the individual who can get the work done. I say this is one of the reasons their are a lot of people OUT OF WORK. If we had a job or given the opportunity, then we would able to fix our credit, you miss out on good applicants. We use to be hired on our qualifications, experience, and we still have those qualifications, experience, but now we are NOT hired due to our credit score.
Please can someone answer this question, What does your Credit has to do with getting a job.
As you apply for jobs the time may come where a company will ask for a credit check. You might be wondering, why do they need to know what my credit is?
Here are some things you need to know!
1- What they will see Potential employers will see a modified version of your credit report. The report will show your payment record, the amount you owe and your available credit. An employer credit report does not show your credit score or disclose any account numbers.
2- If you have a lot of late payments An applicant’s credit history can flag potential problems an employer could face. This could indicate to employers that you’re not very organized, responsible, or perhaps don’t live up to agreements. Make sure to keep up with your payments by setting reminders or having the bill be paid automatically.
3- If you mishandled your finances This could indicate a poor fit for a job that involves being responsible for the company's financial standings or consumer information. They will likely move onto a new candidate if things aren't in place, so be cautious of this.
4- Who will ask for a credit report This often depends on the field you are applying to. The most common are those roles in which you will be working with money or finances (such as credit card companies, working as a parking lot or toll booth attendant, bank teller, accountant, etc). However, an employer can request one in other fields as well.
5- They can’t run a credit report without your permission Thanks to the [Fair Credit Reporting Act] (https://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-credit-reporting-act), prospective employers are required to notify you in writing that a credit check is part of the application process. You must also give written authorization before they’re allowed to pull your credit report if you wish to proceed. If you are turned down for a job because of credit problems, the employer must give you a copy of the report and explain your rights under the Fair Credit Reporting Act.
6- Avoid being turned down Make sure to monitor your credit report regularly and do your best to ensure your accounts are in good standing. Set monthly reminders to pay your bills, and if you are unable to pay the minimum don’t be afraid to reach out to that organization to see what can be done to lower your payment amount. One or two late payments can really devastate your credit.
If you're not sure how your credit is you can use sites like Credit Karma to check in and see how you're doing. If your credit is awesome, keep it up!
Please comment below!
Has anyone ever asked for a credit history for an interview? I was asked once and declined to give them that type of information before even meeting them. Needless to say, I ended the interview right then and there. The interviewer was surprised and told me i was the first one to decline. My reasoning is simple. Unless i have the job in writing they do not need sensitive information about me.
I was working for Mass Mutual, here in Charlotte NC. I applied for a job at another Broker Dealer Firm here in Charlotte, LPL Financial. I previously worked for LPL for 7 years prior to going to Mass Mutual. When I interviewed I got the job, signed the offer letter on May 10th and gave my 2 weeks notice to Mass Mutual on May 12th. My last day at Mass Mutual was May 24th. I was all set to start my new job at LPL on June 5th. May 31st I received the email, your background check has cleared and you are all set for orientation. I went to LPL to do my badge and finger prints as well. The morning of June 5th, I received an email that said, due to medical bills being in collections on your credit, we are unable to hiring you for this position. I was devastated because I quit my job at Mass Mutual to come to LPL and trained my replacement. If my credit was an issue, why didn't they do this background check before my start date and why did they send me an email saying my background had cleared. So, now I'm out of both jobs. This has NEVER happened to me before and I've worked since I was 16 years old. I reached out to HR at LPL and it looks like the background check email was sent to me in error and the background check itself wasn't done in a timely manner. So someone dropped the ball but it cost me a job and a $55K salary. I have been out of work since May 24th and have had the hardest time finding another job. Also, I am unable to collect unemployment because technically I never officially worked for LPL although I signed the offer letter and accepted the position. Any advice on how to handle this situation?
I had a successful interview last week for a inbound benefit customer care position. They showed interest right on the spot and asked me to sign a waiver for a background and credit check. I’m nervous about my credit check because I know it’s going to come back a low score. My credit took a hit being out of work and without a steady income such a long time. Should I call ahead of the results or just let them run my credit and hope that it’s high enough to get the job? Worried!