How Bad Credit Score Affects Your Job Prospects
Many Americans may not be aware of this, but quite a large number of employers check credit scores when they are screening applicants for an employment opportunity. Surveys have suggested that more than 40% of employers conduct this ‘credit check’ on job applicants.
This is definitely an unpleasant revelation to many who have lost jobs during the recession and as a result fallen behind on repayments. The problem is that unless you can find a job that gives you a regular paycheck there is no way to set your finances in order and improve your credit score.
But if more and more jobs begin to hinge on your credit score, you may need to improve the score first to even get a job. While the debate goes on in Congress about whether credit checking by employers should be prohibited, let’s see why employers consider your credit score so important.
Good credit scores show management skills
Many employers study the credit scores of prospective employees to asses their management skills, particularly with respect to managing finances. If your rating is poor, they assume that you lack the ability to plan for emergencies or lack the judgment to spend wisely and prioritize expenses. These are skills that all employers would prefer in their employees as far as most professions are concerned.
Sign of financial distress sends a red signal
Any sign of financial distress, for example, mention of repossession, foreclosure proceedings, legal suits filed by debtors etc are considered as red signals by many employers. This is especially true when you are applying for a job wherein you will have access to large sums of money, say in a bank or an insurance company.
Indication of irresponsibility
Many employers believe that a poor credit score that shows several unpaid dues is an indicator of irresponsible behavior. They assume that you lack the commitment to fulfill your obligations if you have many bills that are unpaid.
However, the fact that credit checks are becoming a part of common pre employment procedure is not necessarily a bad thing for you. By staying current with recent bills and by working out deals with long standing creditors you can show that you are taking positive steps towards improving your credit score. Any employer will be willing to give you a chance to present your side of the story when he can see some marked improvements in your score in the period leading up to your employment application.
Keep in mind that your employer needs your permission to carry out the credit check. So before sign your employment application forms, do read the fine print and be prepared in case it contains a clause for a credit check authorization.