Is Bad Credit Making Your Job Search a Struggle? Here's How to Make It Better

Job hunting

You know that you need a decent credit record to get a favorable interest rate on a car loan or mortgage or even to be approved, but did you know it can also affect your career? For those that are job searching now or plan to make a career move in the future, your credit score may be the factor that decides whether you get your dream job or get denial after denial by credit-conscious employers. Here's what you need to know.

Half of employers run credit checks
Although many employers in recent years chose to run credit checks as part of the pre-employment screening process, this practice is now (thankfully) on the decline. Many states have passed laws prohibiting or limiting employers rights to run credit checks as a condition of employment. However, North Carolina is not a state that curbs this practice. Many private employers in NC still run credit checks even when the job you're applying for has no direct ties to financial practices.

Why employers consider credit when hiring
If you have responsibility for handling cash or making financial decisions, an employer may feel you can't make good decisions for them if you didn't make you decisions for yourself. In fact, there is no proven link between a poor credit record and your on-the-job discretion. An employer may also believe that if you don't pay your bills on time, you won't show up to work on time or carry out your duties promptly. But job performance has no proven link to your personal bill paying skills.

Credit reports often push borderline candidates out
If you are on the bubble for a hiring decision and it could go either way, a negative credit report could push you over into a “no” for the job. Credit reports may also be used to break a tie – if you're up against another candidate and you're both equally qualified and experienced, a credit report can be used to make the decision. Employers will almost always pick the candidate with the better credit report. Fair or not, most employers believe it's a selling point.

You may not know about a credit check up-front
If you know you have poor credit and have already lost out on a job because of it, you may want to avoid applying for jobs that check credit. The problem is, you may not always know that a credit check is required. Some employers will list off the screenings you must go through in the job ad, but others may not mention the background checks they'll run until you receive a job offer. You can be 98% of the way towards landing a job only to be hit with this requirement and have your hopes dashed.

How to conquer a pre-employment credit check
If your credit is less than great and is causing you problems in your job search, there are some things you can do. Consider these approaches:
  • Request a statement be added to your credit reports from all three agencies. Write up a short statement explaining why you had late payments and are back on track now. You can add a 100-word statement to your credit report, and it may be a good idea until your credit improves.
  • Scrape up some cash to clear up any old judgments that might be lingering and making your report look bad.
  • Ensure there are no old items on your report that should have already dropped off. Also, check for inaccuracies. Appeal to the credit agencies to clean up errors on your reports to improve your employment prospects.
  • Consider filing bankruptcy if your credit is a mess and you owe too much to get caught up. A bankruptcy usually looks better than a pile of unpaid debts. That way the employer knows you have a clean slate and won't be sweating financial issues while you work for them.
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