Could Bad Credit Cost You a Job?

So you aced the job interview. But can you pass the credit check?

That's right, a growing number of employers are checking job applicants' credit reports, even when the job doesn't involve financial responsibilities and management.

About six in 10 employers conduct credit checks on at least some of their job applicants before deciding whether to extend an offer; 13 percent conduct them on all candidates.

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The upshot? One in 10 unemployed workers say they've been turned down for a job because of negative information in their credit history, according to a recent report by the public policy organization Demos, which surveyed about 1,000 households with credit card debt.

And the situation, it says, may actually be worse. The true number of job candidates who've been turned down because of their credit is probably much higher.

Related: Does Credit History Matter After 50?

As many as one in eight people say they have poor credit because of errors on their report, the Demos report notes. It also says that credit checks are preventing people who need work the most from getting jobs:

"Poor credit is associated with household unemployment, lack of health coverage and medical debt. These factors reflect the poor economy and personal misfortune and have little relationship with how well a job applicant would perform at work."


People from households in which someone has experienced prolonged unemployment in the last three years were much more likely to describe their credit as poor and less likely to describe it as good or excellent than those who have not had prolonged joblessness, the report says.

And if anyone knows about prolonged joblessness, it's older workers. They tend to suffer from longer bouts of unemployment - nearly one in two have been without work for six months or more.

The report says that companies were commonly using credit checks for jobs that required a high level of financial responsibility, or for senior executive positions. Increasingly, though, employers are requiring credit screenings for positions that have nothing to do with fiscal management, like working as a delivery truck driver or a home health care aide, supervising a stockroom or even serving frozen yogurt.

The Fair Credit Reporting Act allows employers to conduct credit checks if job applicants give their written permission. Applicants are required to be notified if they don't get a job because of information in the credit report. Employers generally give three to five business days for applicants to begin disputing their credit report if they believe the information is inaccurate. At that point, employers may take action based on the report and must once again notify the job applicant.

A growing number of states are restricting the circumstances in which an employer can deny jobs on the basis of credit history. But these consumer protections don't go far enough, the report says.

If you're hunting for work, protect yourself by checking your credit report at  www.annualcreditreport.com for any errors, and clear them up immediately. If you could benefit from a higher credit score, take these steps now to boost your number.

Photo: Match Financial/flickr 

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