Can Bad Credit Hinder Job Offers?

The information contained in your credit report can affect your ability to get new credit, rent or buy a home, and influences the interest rates you pay, but your financial history can affect even more. Some employers have instituted credit checks as part of their employee screening process, and what the report contains can hurt you.

Reasons

It is becoming more common for employers to run credit checks on potential employees, especially in the financial and banking industries. If your credit history is spotty -- containing repossessions, defaults, judgments and liens -- it can hinder your ability to get a new job. Some employers look at your credit history as an indicator of your responsibility and will not hire you if you appear unable to manage your finances. In addition, when it comes to jobs where you'll have access to cash or other people's assets, some employers believe -- perhaps inaccurately -- that those with significant financial issues are more likely to steal from the company or clients.

Common Industries

According to financial expert Liz Pulliam Weston, your bad credit is most likely to hurt your job prospects when you want to work in a position that requires national or FDIC security clearance, at a state or local agency that has access to financial information and upper level positions at banks and other financial institutions. Bad credit can also hurt you when you want to work in other financial services positions, such as insurance, where you'll have access to sensitive financial and identifying information. Jewelry stores and manufacturers, hotels and cleaning services also may use your credit report as part of a background check, since you'll have access to valuable items and personal possessions.

Explaining Your Situation

When an employer notifies you that they require a credit check before offering you a job and you're concerned about items in the report, take the opportunity to explain your situation. If you have fallen behind on your bills because of unemployment, for example, explain that your financial woes will be fixed once you have income again. If you have extenuating circumstances, such as identity theft, illness or divorce causing your spotty credit history, let your employer know. You do not have to go into great detail, but sometimes an explanation can make the difference between a job offer and continued unemployment.

Your Rights

If a potential employer reviews your credit report as part of the hiring process, you have certain rights. An employer must notify you if they plan to check your credit, and you need to provide consent. Running any kind of background check without your consent is a violation of the Fair Credit Reporting Act. Federal law also prevents an employer from using a bankruptcy against you when making a hiring decision. And if the employer decides not to hire you because of the information contained in your credit report, by law they need to notify you that the report was the reason behind the decision and give you the name of the credit reporting agency that supplied the report so you can dispute any inaccurate information.