Job Seeking and Your Credit Score: Why It Matters

By February 26, 2019Credit Reports, Credit Scores
job interviewer looking at an application

Job Seeking and Your Credit Score: Why It Matters

When you’re on the job hunt, generally you’re looking to put your best foot forward — in every way possible. Ideally, your qualifications, skills, and past experience alone would set you up for a successful job search. However, your credit score when job seeking could also play a part in your application. Many job seekers are surprised to find out that a credit check is included in a standard pre-employment screening.

Why Is a Credit Check Needed?

Employers typically check potential employees’ credit to obtain a more complete picture of their candidacy. (Note: If you live in California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, or Washington, and certain cities and jurisdictions, employers are restricted or prohibited from using credit history as part of an employment decision.) The good news, though, is that when potential employers pull your credit report, they do not access the same level of information that a lender or creditor would. Your credit score when job seeking is, luckily, off-limits. However, the main criteria that factors into the calculation of your credit score — such as your history of on-time payments, amount you owe, and your available credit — will be fully visible to employers. So, even though would-be employers might not be able to see your credit score when you are job seeking, your current credit situation could interfere with your job prospects. Here are the major reasons why your credit matters when you’re pursuing a new position — and how you can overcome this if it becomes an obstacle in your path to employment.

 Illustrates Level of Organization

Your approach toward your own personal financial affairs can speak volumes to your organizational and time-management skills. If you’re up for consideration for a role that requires money management, companies want to know that you can successfully handle your personal finances as well. Your credit will be subject to more scrutiny if the job involves access to large quantities of money or highly sensitive consumer information. A credit report that reveals missed payments, outstanding balances, or a high credit-to-debt ratio could signal that you lack the organizational skills required for this type of position.

May Hint Toward Financial Distress

Your credit report will list your payment history and any accounts you have opened. Certain indicators, such as a flurry of recent account openings, late fees, or high credit utilization, could signal that you are in financial trouble. Potential employers might suspect you are only seeking new employment out of a desire for fast cash and not an actual interest in the job itself. In addition, they might be concerned that you will not be able to support yourself and pay your debts with the salary they are offering. Lastly, even though you may not have committed any wrongdoing, potential employers might see you as a risk for committing theft or fraud in order to cover your debt problems.

Shows Responsibility and Maturity

Paying your bills on time every month is good for your credit score — and the same is true for your overall credit report. A history of on-time payments shows potential employers that you are responsible, trustworthy, and fully capable of committing to obligations. On the flip side, a spotty payment history might hint that you do not have the level of responsibility that the employers require in the position you are seeking.

How You Can Address Problems

A history of credit problems may well cost you a coveted position. If you want to avoid this, it’s best to try to address the situation upfront. If you know you have negative information on your report — and the employer has informed you that you will be subject to a credit check prior to a job offer — be proactive and come prepared to explain what happened. Focus the conversation on what you have learned from the situation and the concrete steps you are taking to fix it. The more straightforward and solution-centered your explanation is, the better. The employer might even reward your honesty with a job offer.

H2: We Can Help

As you perfect your resume, don’t forget to clean up your credit report, too. Embarking on a job search is an excellent time to check in with the major credit bureaus and dispute any incorrect details that could be tarnishing your credit score. At Ovation Credit, this is our specialty. Contact us here for a free consultation.

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