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How Will My Low Credit Score Affect Getting a Job?

Often times, when I counsel individuals on their credit, they are concerned with how their low credit score will affect their overall lives.  They want to know if their lower credit score will affect their ability to gain new employment or affect their current employment. The answer to this is complicated, but a lower credit score could affect your ability to get certain jobs if you are seeking new employment.

Depending on what state you are in, there are different rules and guidelines as to how potential employers can check your credit or use your credit score.  For instance, California is very strict on how and when employers can ask for a credit check in the employment process. The reality is, however, that hiring new employees is about reducing risk to the business. If a candidate’s credit score is not good, this can show the employer many things.  

How much weight an employers places on a credit score or bankruptcy depends on the industry. For example, if you are going to be handling large amounts of money, a signer on a bank account or have access for sensitive information such as social security numbers, your credit history and score could be important.  The employer wants to be sure that you are trustworthy and know how to handle money. Credit checks are also more likely for jobs that include security clearance.

If your credit report reflects that you are living with a large amount of debt or financial stress, the employer might feel that your full attention will not be on the job. Your financial obligations might have a negative impact on your ability to do their work.  A history of slow payments or non-payments might show an employer that you do not make your finances a priority. Essentially, the employer may feel that late payments signify that you are not organized and trustworthy.

How It Works?

As I stated above, every state is different in their regulations for employer credit checks.  And every industry is different in the amount of weight they place on a potential employee’s credit. If an employer wants to access your credit report, they will see a modified version of your credit report. And this type of credit check is a “soft inquiry” on your credit, so points will not be taken off your overall score. The employer must notify you that they intend to check your credit and obtain your written permission.  The Fair Credit Reporting Act requires that the notice be “clear and conspicuous.”

So What Can You Do?

Sometimes a lower credit score is unavoidable due to circumstances in life.  Check your report for errors that need your attention. The law allows you to dispute inaccurate information and you can even request any information in your credit file that might be inaccurate, incomplete, and unverifiable.  After looking for discrepancies, I encourage all of my clients to follow steps to improve their credit score and be aware of what affects their credit. My blog last month covers what makes up your credit score and how to improve it.

If you are asked by a potential employer to see your credit score, it is best to get ahead of the situation.  Before even applying for the job, know where you credit stands. That way there are no surprises. When an employer asks to see your credit and you know it is less than stellar, you can be prepared to tell them the circumstances of how it got there and what you are doing to raise it.  In the end, honesty is best and if you are working to rebuild your credit tell the potential employer.

For further information on how to improve your credit or how to alleviate financial stress, visit Khan Law Offices’ website. Khan Law Offices promises to not only help you out of your financial situation, but also give you the resources to have full control of your life again.  Contact us today.

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