It’s no surprise unemployment is a major contributing factor to bad credit. If you’re not making money, you can’t pay your bills and if you are not paying your bills on time, you are getting late payment dings on your credit reports. What few people realize, though, is that bad credit contributes to unemployment, some positions more so than others. While it’s certainly possible you’ll be hired for one of the following jobs despite bad credit, chances are slim, especially in a tight job market.
- Senior Executive
- Mortgage Professional
- Bank Teller
- Store Manager
- Salesperson / Retail Associate
- Delivery Driver
- Military / Government Position
Of course, this is by no means an exhaustive list. Any job is a candidate for a credit check if it requires dealing with finances and/or being privy to confidential information. That said, any employer could request a credit check, so anything is possible.
Is It Legal For Employers to Check Credit Reports?
It depends on where you live. If you live in a state where an employer can legally pull your credit, they must first request your permission and receive your consent in writing. However, there are 11 states which have laws in place prohibiting employer credit checks and/or restricting how this information can be used in the hiring process. These states are: California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington.
How is a Credit Report an Indication of Job Performance?
Actually, studies show it’s not. Yet employers increasingly cite bad credit as an indication of questionable character and irresponsibility, as well as the potential for fraud and theft. The bottom line, employers are looking to limit their liability for making poor hiring decisions.
Can You Refuse a Credit Check?
Yes, you are by no means required to submit a credit check by a potential employer. Understand, though, that your refusal probably means you won’t be considered for the job. This again depends on the state you live in.
Do Employers Check Credit Reports?
Though the number of employers checking credit has fallen in recent years, it is still a common practice. In 2014, 47 percent of employers used credit checks. Thirty-four percent of employers say they only check the credit of those being considered for certain positions, whereas 13 percent say they check the credit of applicants for every position.
Can I Be Turned Down for a Job Because of Bad Credit?
It’s impossible to say with any certainty, but chances are good. One study of unemployed Americans found that one in four of them were subjected to a credit check as part of a job application process. Of the same group, one in ten were told the credit check influenced the decision not to hire them.
What do Employers Consider the Reddest Flag on a Credit Report?
Since potential employers do not see your credit score, your credit report is up to subjective interpretation. However, old, unsettled debt likely counts as the biggest strike against you.
Does Credit Matter More than Relevant Work Experience?
Again, it depends on the employer, but largely, no. In fact, 87 percent of employers say previous work experience is the single most important factor when considering a job applicant. It’s worth noting, however, that 14 percent of employers actually rank credit at the top of the list.
How Can I Improve My Credit?
There is no quick-fix solution to bad credit. However, there are steps you can (and should) take to clean up your credit — for the good of your job search, as well as your financial future. First of all, request your credit reports from all three major credit reporting agencies through AnnualCreditReport.com and follow these steps.
- Go through each report carefully
- Look for errors and old, unpaid accounts no longer with the original creditors
- Dispute these items with the credit bureaus
See our extensive resources on debt validation for more detailed information on this process.