Can your bad credit influence hiring decisions and keep you jobless? Yes. But, is it legal to check credit reports of job seekers like you? Both ‘yes’ and ‘no’. In some states, potential employers can check your credit report to decide if you’re an ideal candidate for their organization. However, in states like California, Illinois, Washington, Maryland, Hawaii, etc. laws have been enacted to restrict employers from checking out job seekers’ credit reports.
What is the correlation between bad credit and hiring employees?
There is no direct correlation between job and credit history. But, employers have a different opinion on this subject. They give various reasons for reviewing credit reports of job seekers, and these are:
- Fear of theft
- Facing legal action for recruiting someone
But the biggest reason is the normal connection between irresponsibility and bad credit. Employers feel that if someone can’t manage his/her credit report smartly, then how would that person take care of his/her job responsibility seriously?
Moreover, a few employers associate poor credit with questionable character, which surely isn’t a good quality.
Can you stop an employer from checking your credit report?
Yes. You can. But remember, the employer also has the right to scrap your job application. Employers need to take your permission before pulling your credit report. This is the law. If you give your permission, then the employer may scrutinize your credit report and decide whether or not to hire, fire or promote you. So, you hardly have any choice. But, the employer is legally required to inform you if he has decided something on the basis of your credit report. Moreover, he needs to give you a copy of your credit report and disclose the name of the credit reporting agency, who has issued it.
What do employers check on your credit report?
Employers check a few things on your credit report, and these are:
- Bankruptcy that had been filed more than 10 years ago
- Paid-off tax more than 7 years old
- Lawsuits
- Judgment
- Your past employers
Usually, employers check your past employers to confirm if you have told the truth in your job application.
What kind of job can you lose due to bad credit?
Here are a few kinds of jobs you may lose due to bad credit:
- Job in the finance industry
- Job in the banking industry
- Any job where you have to deal with personal information
How can you increase your chances of getting a job?
The situation is already against you. So, you have to take all the possible actions to increase your chances of getting a job. The first thing you need to do is pull credit reports from all the 3 credit reporting agencies - Equifax, Experian, and the TransUnion. This’ll give you a fair idea about how bad is the condition of your credit. If you can take any step to repair your damaged credit, then do it. And if you can’t, then think about a touching explanation of how you got into this situation. Your explanation can help you qualify or disqualify for this job. Always, remember this.
Bad credit can keep you jobless for a long time
When you’re unemployed, it becomes very tough to pay all the bills. Plus, there would be other types of debts too since you may have to use credit cards to put foods on the table. A blemished credit report would make it difficult to get a job. This means you won’t have any money to pay your bills or buy food. This would bring down your credit score even more. You may feel frustrated or irritated since it’ll be more difficult to get a job.
