How Your Credit Score May Affect Your Job Search

Kat Tretina

June 21, 2017  •  3 Minute Read

Credit Basics

If you’re interviewing for a new job, you know the importance of a polished resume, personalized cover letter, professional interview attire, and preparedness. One of the most overlooked factors that can affect your chances of getting a job is your credit.

Find out how your credit score can affect your job search and what you can do to protect yourself.

Why Do Employers Look at Credit Reports?

While it may feel invasive, many employers say that looking at candidates’ credit reports or credit scores is a smart idea. In a survey of employers, the most common reasons for conducting credit checks included decreasing the risk of theft or embezzlement and reducing negligent hiring.

However, having a good credit report can help you. If you are evenly matched with another candidate, your stellar credit can set you apart and help you land the job.

What Employers Check Candidates’ Credit?

According to the Society for Human Resource Management, 47 percent of employers conduct credit inquiries as part of their background check procedure. And it’s not just employers in the financial sector; non-profit organizations and small businesses alike may do credit checks.

Any position that handles money, such as payroll coordinators or even grocery store cashiers, will likely have to undergo a credit check. If the job entails handling any confidential information, from donor information to trade secrets, you will probably have to go through a credit check as well.

In the future, the prevalence of credit checks could decrease. Government officials have introduced federal bills that would prohibit employers from checking applicants’ credit reports, unless a credit check is required by local law or when a job requires security clearance.

In the meantime, credit screenings are still very common, and you should prepare for employers to check your report.

3 Things You Can Do to Protect Yourself

If you are currently job searching, there are some steps you can take to protect yourself from losing out on a job because of your credit:

1. Check Your Credit Report

It’s important for you to know the status of your credit. You can check it for free at annualcreditreport.com. Your report will list of all of your current and past lines of credit, including student loans, credit cards or personal loans. It will also detail your history of on-time payment, late fees or delinquencies.

2. Dispute Errors

When you review your credit report, look for errors like fraudulent accounts or mistaken entries. These issues can hurt your credit, but if you spot them and report them to the three credit bureaus and the company that holds the debt, you can have them removed.

To dispute an item on your credit report, write a letter disputing the error and include documentation, such as proof of payments. Mail the letter to both the credit reporting agencies and the bank, credit card company or loan servicer that provided inaccurate information.

You can contact the credit reporting agencies at the following:

Equifax: 1-866-349-5191

Experian: 1-888-397-3742

TransUnion: 1-800-916-8800

Once the organizations have received your information, they’ll review your report and remove the errors. This approach can dramatically improve your credit report.

If you are interviewing for a job while still disputing the charges, you can use the copy of your letter as proof of the issues if asked by the employer.

3. Prepare an Explanation

If your credit report isn’t great and it doesn’t have any errors to dispute, don’t lose hope, 80 percent of employers who perform credit checks report that they have hired candidates who had items on their credit reports that reflected negatively on their finances. That means many employers are still willing to hire people with less than excellent credit.

If you have issues on your credit report, you can help your chances of landing a job by making sure you know the problems your report shows and have an explanation for those incidents.

For example, if your credit report shows you fell behind on payments and you were going through a medical emergency, your prospective employer is much more likely to be sympathetic. And most organizations will understand falling behind on your bills if you’re unemployed and job searching.

Your Credit and Job Searching

While your credit report can significantly impact your job search, it’s important not to despair if your credit is less than perfect. By reviewing your report, disputing errors and being prepared to discuss your financial hiccups candidly, you can sooth employers’ fears and still get the job.