How and Why Credit Impacts Employment

The job market this year has been a dismal place for nearly 9 percent of the U.S. population. Despite the increase in jobs, many people are still struggling. When money is tight and positions are sparse, employers are becoming more selective about their personnel choices. Hiring managers want employees they can trust. The ability to perform well in any given job depends on your:

  • Responsibility level. Can you handle tasks in-full and on time?
  • Management. Juggling is usually a part of any career. When the pressure is on, how well can you balance the workload?
  • Trustworthiness. Honesty is imperative to any employer, especially those in the financial and retail spectrums. When money is involved, your boss needs to know it’s in good hands. That’s why more employers are now checking prospective employees’ credit histories for examples of bad credit.

As you may have noticed, the qualities of a good employer are also the qualities of a well-maintained credit report. That’s why so many employers are running those credit checks as part of the interview process these days. For example, Barry and Steve are both interviewing for a business analyst position. The job requires an intermediate level of problem-solving and decision-making. Both candidates fared well in the interview, however their background checks told a different story. While Barry maintained a clean credit record and a score of 745, Steve’s credit report was peppered with late payments, a high credit utilization ratio, and even a charge off. In this example, it makes sense that the job was offered to Barry.

If you are plagued with bad credit, this scenario may undoubtedly be relevant to your own career roadblocks. Don’t give up though: The path may be rockier, but a little strategy can help you overcome the rough spots.

Ways to Rise Above
Repairing bad credit takes time—time you may not have in the job market. While there is little to be done about the parameters of employer policies, working well within them is another story. Follow the tips below to minimize the fallout of your credit history, and maximize your chances of landing the job of your choice.

  • Be up-front. Anticipating and preparing answers to interview questions is standard practice for seasoned professionals, so why should matters relating to your bad credit be any different. When you know your financial past is an issue, be the first to bring it up. By law, employers must get your permission to check your credit. After giving them the go-ahead, be sure to warn them of what they might see. Begin by saying, “I should tell you that my credit history isn’t perfect.” –Although past mistakes are never pretty, the ability to be accountable and take responsibility is admirable.
  • Include the details. After exposing your bad credit truths, don’t let your interviewer hear crickets. Offer a short and simple explanation to what they might see. For example, Katie is a pharmacist looking for a position in a new city. She supported herself through college with student loans, accumulating over $75,000 in debt. After graduation, she made the mistake of sharing an apartment with a less-than-reliable roommate, resulting in few late rent citations on her credit report.
  • Katie’s credit score isn’t perfect, but her explanation did wonders for her competitive edge. She explained the root of each credit issue, the merit supporting her debt, and the circumstances behind any negative citations. In your interview, provide concise reasons without getting too personal. Employers can only work with the information they have, so make sure your information is complete.

  • Outline a credit repair plan. After explaining the reasons for your bad credit, help your chances by offering information about your plans to change. Outline your efforts to pay down debt, diversify your credit portfolio, and find better employment to solidify your financial future. Hiring managers prefer initiative, so make sure to emphasize your own.
  • Exploit your strengths. Don’t discount your qualifications and abilities. If the hiring manager called you for an interview, chances are they saw something they liked. Highlight your professional abilities and willingness to work hard in a new position. If you were referred by a friend, ask them to put in a good word for you and reassure the boss. Personal references can go a long way.

Bad credit can affect every area of your life, but your drive to make a change can turn it all around. Arrive at an interview prepared to answer hard questions with proactive answers. It could land you the job you’ve been waiting for.