How Bad Credit Can Affect Your Chances of Finding Employment

Bad Credit's Negative Impact

In today’s economy good credit is extremely important, especially if you are in search of gainful employment. Although you may have an excellent resume, many well qualified applicants are getting turned down based solely on negative information found in their credit history. The purpose of this article is to educate you about the direct relationship between credit and qualifying for employment and to offer tips how you can more adequately prepare yourself to get a job.

As most of us are aware, the nation’s unemployment rate has remained unusually high due to the sluggish economy. As such, many people have been adversely affected; losing their jobs, having their homes foreclosed, and vehicles repossessed. This devastation has, in many cases, resulted in people finding themselves with bad credit. If you are among these job seekers, be forewarned you may be overlooked by potential employers because of your questionable credit history.

Bad Credit, No Credit... No Job

Mitigating the Damage

If you are of among the thousands of people looking for work, but have bad credit, there are a few things you can do to improve your chances of getting a job. First, it is imperative that you have a well-written resume highlighting your personal strengths, educational achievementsand work experience. If you need help creating a resume, professional services are available to assist you. For instance, ResumeEdge has a great reputation and is skilled at offering timely and cost effective resume building services.

Obtaining a Free Credit Report

The next step involves getting a copyof your credit history. The three credit reporting agencies are Equifax, Experian and TransUnion. It is advisable to purchase a comprehensivecredit report containing details from all three agencies from Credit Report. Make certain to scrutinize all information; in particular, check accuracy of accounts, dates, addresses and spelling of names. If you determine any information to be inaccurate, contest the details immediately.

You can also utilize Lexington Law to try to remove negative items from your credit report before an employment check is made. Although they aren't a magic bullet they do have a 20 year track record of successfully improving people's credit.

Full Disclosure is Key

With a professional resume in hand and a clear understanding of your credit history, now is the time to start applying for jobs. Remember that today’s employers are fortunate to have a high number of qualified employee candidatescompeting for the same position. If you find yourself among the top applicants, and are asked permission to run a background and credit check, as the final step to make a determination, this is the time to disclose your bad credit situation. You will be surprised to learn that many employers are understanding and sympathetic but you must know the details of your credit issues and clearly explain what was the cause of them.

Not Impossible

As discussed, economic turmoil in the nation has resulted in an unusually high unemployment rate. This has resulted in thousands of people losing their jobs, homes and vehicles, and is also the major contributor to causing damaged to credit scores. If you are among this group of people and in search of gainful employment, it is recommended that you obtain a professionally formatted resume and purchase a copy of your credit report prior to soliciting employers for work. Understanding your situation relative to the competition in the job market will serve you well!

Comments 30 comments

Kathryn Stratford profile image

Kathryn Stratford 3 years ago from Manchester, Connecticut

I have noticed that there are some jobs out there that place a lot of emphasis on your credit report. I hadn't thought about checking mine beforehand, though. That is a good point. Thanks for sharing this useful information.

Tom Schumacher profile image

Tom Schumacher 3 years ago from Huntington Beach, CA Author

Kathryn, thanks for sharing. Yes indeed, your credit history can be one factor that disqualifies you from certain employment opportunities. Read this:

Kathryn Stratford profile image

Kathryn Stratford 3 years ago from Manchester, Connecticut

Thank you for sharing the above link. I think it would be good if states banned the practice, although I suppose I see the logic behind employers wanting the information. But since so many people have gone through hard times, a negative pattern in the credit history may be as a result of that, not as something they would typically do under normal circumstances.

Tom, would you mind if I put a link to this on one of my articles on unemployment? I provided a lot of tips, but this wasn't one I thought of.

Tom Schumacher profile image

Tom Schumacher 3 years ago from Huntington Beach, CA Author

Hi Kathryn. Absolutely and thanks for asking. And I agree with your previous statement; I also "see the logic behind employers wanting the [applicant's credit history] information." That is why obtaining a copy of your credit history is material to the job interviewing process. Thanks again!

beingwell profile image

beingwell 3 years ago from Bangkok

Very informative hub, tom. I'm sure a lot of hubbers will appreciate this. Voting up and shared.

Tom Schumacher profile image

Tom Schumacher 3 years ago from Huntington Beach, CA Author

Thanks beingwell. I stumbled upon your hub about jiaogulan tea and found it quite intriguing. I'm looking forward to trying it soon. ; )

RTalloni profile image

RTalloni 3 years ago from the short journey

This will be helpful to people who do not know that their credit history could negatively influence their job applications. It seems that being prepared can solve the problem in many cases!

Tom Schumacher profile image

Tom Schumacher 3 years ago from Huntington Beach, CA Author

RTalloni, I agree completely...properly preparing for the job selection process includes, in many situations, a thorough review of one's credit history. And it's essential to obtain reports from all three credit reporting agencies - Equifax, Experian, and TransUnion - because information cited in one often differs from the rest. Thanks for sharing!

moonlake profile image

moonlake 3 years ago from America

I think it's awful how many different places check your credit and I personally don't think it is the business of an employers. Good people lose jobs because their credit has become bad over the economy. We were just talking about this the other day that the animal shelter does a credit check before you can own a pet. Credit checks have gotten way out of hand in my opinion. Your hub was interesting and full of imformation. Voted up.

Tom Schumacher profile image

Tom Schumacher 3 years ago from Huntington Beach, CA Author

Moonlake, thanks for the comment. You raise a valid argument. Many people I have spoken also oppose credit checks for pre-employment consideration. However, employers I know feel this information is useful and more often than not relevant. Regardless, until such time legislation is passed prohibiting such activity it will likely continue. That said, and for obvious reasons, it is very important for job seekers to understand their credit history prior to interviewing. ; )

Emmanuel Kariuki profile image

Emmanuel Kariuki 3 years ago from Nairobi, Kenya

This is vital information that is easily overlooked by applicants. Thanks for sharing.

Tom Schumacher profile image

Tom Schumacher 3 years ago from Huntington Beach, CA Author

Emmanuel, thanks for commenting. And yes, it is important to understand your credit score prior to applying/interviewing for a new job. This includes verifying data reported by all three credit agencies - Equifax, Experian and TransUnion - to ensure accuracy and completeness. You'd be amazed at mistakes that occur!

epbooks profile image

epbooks 3 years ago from Las Vegas, NV

That is interesting. I had no idea that bad credit can affect chances for employment. Great advice for any who find themselves in this situation. Voted up!

Tom Schumacher profile image

Tom Schumacher 3 years ago from Huntington Beach, CA Author

Hi epbooks, indeed bad credit can affect your chances of finding gainful employment. And, it's not only the credit score you should be concerned with but also the specific details of each debt account. For example, sometimes a creditor will report adverse information by mistake. Unfortunately, regardless of how innocent the error may have been, you suffer the consequences and bear the responsibility of clearing up the error. ~ Good luck protecting your credit and thanks for sharing!

rajan jolly profile image

rajan jolly 3 years ago from From Mumbai, presently in Jalandhar,INDIA.

Very useful information. Thanks for sharing.

Au fait profile image

Au fait 3 years ago from North Texas

While it's not talked about, the policy of refusing to even consider the application of a person who is currently unemployed remains in place. I think that is plain and simple mean spiritedness.

There is only one real skill and/or talent that anyone needs to have in order to get and keep a job and receive regular raises and promotions. Indeed if a person has this skill/talent and applies it with enormous enthusiasm his/her supervisors and managers will fight over him/her. You would likely be moderated if I explained what that skill/talent is. If you have this talent you could be a rehabilitated serial killer and still be first choice for any job.

Given the huge turnover in so many jobs there's no reason for an employer to know anything about a person except their name/SS#. With cameras everywhere there is no need to know a person's history.

A credit rating is shared by a married couple and may apply to one's spouse rather than one's self. Somehow, given the current divorce rate it doesn't seem reasonable for anyone to point their finger at other people who have used bad judgment in choosing their spouse. Even if your marriage seems sound today, tomorrow may be another chapter.

Employers should not have any of this information about a perspective employee. They should know only one's education, skills, and experience minus the employer's name where that experience was acquired. Like I said, with the turnover rate being what it is at so many companies, if the person turns out to have lied, the employer can just let them go like they did dozens of others before -- and that shouldn't be on anyone's record either.

I don't think any employer should be able to legally gather information about a perspective employee, or any employee, from that employee's previous or current coworkers. Some coworkers like to lie. Despite popular opinion, the titles 'supervisor' and 'manager' don't preclude lies from passing a person's lips either. Generally if a person lacks the skill/talent previously mentioned above, one will not get a good recommendation from those people who may feel slighted as a result.

Tom Schumacher profile image

Tom Schumacher 3 years ago from Huntington Beach, CA Author

Au fait, thanks for sharing and you make some valid points. I agree – requiring credit history background checks as part of the pre-employment screening process is a contentious issue, especially in light of the struggling economy. In fact, the logic is arguably flawed. That is, to say a person is incapable of performing a job they certainly qualify for because of bad credit is ridiculous. One really has nothing to do with the other. If it were not so, then, and applying the same logic, employers should have the right to complete yearly audits of existing employees as well to verify their credit history remains in good standing and thus able to carry on with job duties and responsibilities or otherwise be subject to demotion or termination.

However, the one exception to this rule is I believe credit history background checks for persons interviewing for job positions that would put them in direct contact with the organization’s money, such as a CFO or CPA, or in charge of decisions that affect the company’s overall health and bottom line profits, such as CEO, should be scrutinized to this extent.

Regardless of our dispositions, this practice of using credit history background checks as part of the pre-employment screening process is likely to continue until more states pass regulation limiting or restricting its use. Of course, this is a difficult obstacle to overcome and for several reasons. For example, employment agencies defend this practice based on the justification that they would otherwise be liable for not performing due diligence in the process of helping employers find well-qualified job candidates. And for this reason alone it is wise for job seekers to know their credit history, and if able fix or correct negative information prior to receiving invitations to interview.

Thanks again for sharing, Au fait. ~ Tom

Sinea Pies profile image

Sinea Pies 3 years ago from Northeastern United States

What an eye opener. I thought our credit reports were private, unless we are attempting to get a loan. So glad I read this. Voted up and useful!

SEO IT! profile image

SEO IT! 3 years ago from Tucson, AZ

I don't think it is right, but I know it is true. I have a friend who was called back for a second interview and thought everything went well, but he did not get the job. It turned out it was a credit issue. He didn't know it could be an issue for employment. He was looking for work that paid better because he was trying to pay off loans. It would be nice if employers would ask about the reasons, but then again, just running the check really does seem like an invasion of privacy and many probably have the best excuse: "I can't pay because I can't get a job -- because I can't pay." Good information to get out there, regardless of my opinion of it. :)

Tom Schumacher profile image

Tom Schumacher 3 years ago from Huntington Beach, CA Author


Agreed, rationally the logic underlying those in favor of running credit checks (in most circumstances) is flawed. Just because a person has bad credit history doesn't positively correlate to being a bad employee. If this were true then people with good credit history should be excellent workers, which we know isn't always the case. The bigger question is where does this so-called "invasion of privacy" end? Meaning, when will employers extend this credit history review to yearly audits of existing employees to verify their ability to continue performing their respective job duties and responsibilities at or above expectations. After all, I am quite certain there are many employees who were severely hurt in this most recent economic downturn and yet they are insulated from this kind of scrutiny. Thus, we agree the logic doesn't make sense but until legislation is passed prohibiting such actions this type of pre-employment screening will likely continue. This, of course, is an uphill battle because 1) lots of money is generated with each order of a credit history report, and; 2) employment agencies have a legal responsibility (liability) to perform due diligence for persons they screen and eventually recommend for employment.

Thanks – Tom.

Frank Atanacio profile image

Frank Atanacio 3 years ago from Shelton

This hub should be placed at unemployment offices, and Job-banks it has a great deal to offer Tom, a very well written..clear and easy to understand voted Useful :)

Tom Schumacher profile image

Tom Schumacher 3 years ago from Huntington Beach, CA Author

Frank, thanks and I appreciate your recommendations!

MarleneB profile image

MarleneB 3 years ago from Northern California, USA

Good information here. I know first hand how important good credit is. When my husband and I lost our jobs at the same time, needless to say, our credit turned bad. I applied for a job and was hired on the spot, but when the employer mentioned there would be a credit check and I would be given a start date if my credit was excellent, I explained about my financial situation and how my credit might not be in good condition at the moment. That employer stood up as if I wasted her time and escorted me out of her office so fast I had to run to keep the door from hitting me in the behind. That was humiliating, to say the least.

Tom Schumacher profile image

Tom Schumacher 3 years ago from Huntington Beach, CA Author

MarleneB, thanks for sharing. The experience you describe is truly unfortunate, however, this is the world we live in and why understanding your credit history is so important.

Shyron E Shenko profile image

Shyron E Shenko 3 years ago

Good advice in here Tom, thanks for sharing. I think that companies that hire because of credit standing are using that standing as an excuse to hire or not. I think most companies hire on first impression and if they don't like a person's face, you will not get the job.

Voting up, UAI, and shared.

Author Cheryl profile image

Author Cheryl 3 years ago

To me I think that anyone would hire someone just because of their credit worthiness is actually being in someone's business that they don't need. I am sure they got into the problems of a bad credit report because they lost their job and couldn't pay their bills I think it would also be safe to say that just because someone has a good credit report does not mean they are a good hire.

Tom Schumacher profile image

Tom Schumacher 3 years ago from Huntington Beach, CA Author

Shyron, hello and thanks for sharing. Agreed, I think the vast majority of employers hire based on education, experience, and references. However, many employment agencies rely on the job applicant’s credit history to further vet their qualifications in the process of fulfilling their due diligence requirements to employers. Or, so they say…

mylindaelliott profile image

mylindaelliott 3 years ago from Louisiana

Thanks for the information.

Tom Schumacher profile image

Tom Schumacher 3 years ago from Huntington Beach, CA Author

You're welcome, mylindaelliott.

Msmillar profile image

Msmillar 2 years ago from Valley Springs

Wow, I had no idea this was going on. You are obviously well informed (or I need to move out from this rock I live under!) , thank you for passing the information on.

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