If you are looking to change careers, you may think that the tight job market is the biggest obstacle to getting the job of your dreams. Yet for many Americans whose credit has been hit by the recession, a corrupted credit report may be a bigger problem as companies increasingly use credit reports as a method of checking potential applicants.
“Businesses seem to check credit reports more because they feel it’s more reliable than reference checks,” says Timothy A. Wilson, founder of TA Wilson & Associates, a Northborough-based human resources consulting firm, in Massachusetts. Indeed, 60% of employers surveyed in 2009 by the Alexandria, Virginia-based Society for Human Resource Management (SHRM) reported performing credit checks on prospective employees, up from 42% in 2006.
What information do they hope to get? Good credit can indicate a desirable level of responsibility among employees. It can also give employers an idea of whether they can trust an employee with regards to money. “Some employers believe that a person with bad credit would be more likely to steal,” says Donna M. Ballman, an employment lawyer based in Fort Lauderdale, Florida. But with an unemployment rate of nearly 10 percent, the number of people who have experienced financial difficulties has increased dramatically, and “if you have bad credit today, it just means you are living in this decade.” , adds Ballman.
Every negative violation on a credit report does not carry the same weight with employers. Here’s a breakdown of how negative credit report items and how often they impact employers’ hiring decisions.
Variable costs of bad credit
Credit checks weigh more heavily in hiring decisions for certain types of jobs, such as those with financial responsibility. So employers may be less willing to hire someone with bad credit in an accounting or payroll department “because they feel you might be at risk of embezzlement,” Wilson explains. Other types of jobs in which a credit report may strongly factor into senior management positions and positions in which applicants would have access to confidential employee information, such as salary, benefits and medical information, according to SHRM reports.
Every negative violation on a credit report does not carry the same weight. According to the SHRM survey, 64 percent of companies said pending judgments, such as court cases, were the most likely to affect their hiring decisions. Next are debt collection accounts, with 49% of respondents saying such accounts would negatively impact a candidate’s employment prospects. Comparatively speaking, 18 percent said a debt to income ratio would negatively impact their hiring decision, 11% said a foreclosure would prevent them from hiring an employee and only 1% would negatively view medical debt.
An important note for job seekers who have declared bankruptcy: The law prohibits employers from refusing to hire someone on the sole basis of bankruptcy, although they can point to factors that led to bankruptcy , such as unpaid debts, explains Ballman.
The rights of the applicant
Although employers are legally permitted to perform credit checks under the Fair Credit Reports Act, they can’t do it without your permission. “They have to let you know that someone is going to do a credit check, and they have to get your permission in writing,” says Ballman. You can of course refuse, but that can put you out of the race, Wilson warns.
The good news is, most employers won’t bother putting together a credit report until they’re impressed enough with you to offer you a job. took a hit. “Paint your own picture rather than asking them to see foreclosure or bankruptcy and make up their own minds,” says Geoff Williams, co-author of “Living Well with Bad Credit.”.Wilson agrees, saying that the time you sign the form authorizing the credit check might be a great time to bring up issues with your credit.
If a manager really wants someone for the job, their support can void a problematic credit report.
|– Timothy A. Wilson
founder, TA Wilson & Associates
If an employer refuses to hire you because of your credit, they should post an “adverse action disclosure,” which essentially includes a copy of the credit report that was used to make the decision, along with a summary of your rights. under the Fair Credit Reporting Act. Once the adverse action has been taken, the employer must provide you with the contact details of the credit Company who provided the report so that you can dispute it if need be. Such actions probably won’t help you get that current job, but at least you know what you’re dealing with for the future and you can eliminate credit inaccuracies and blemishes for the future.
Although many job seekers face the job credit check today, efforts are being made to change that. “About 16 states have proposed laws prohibiting credit checks to be used in job applications,” says Ballman. “And in Hawaii and Washington state, it’s already illegal to use credit information for hiring.” Efforts are also being made at the federal level with Rep. Steve Cohen, a Democrat from Tennessee, author legislation prohibit credit checks in the hiring process.
While such legislation could help those with bad credit in the future, job seekers today should not feel intimidated because of their credit history and always do their best when they are. job interviews and throughout the hiring process.
“If a manager really wants someone for the job, their support can void a problematic credit report,” Wilson explains.
See linked:Help With Bad Credit, Compare Bad Credit Cards, Better Credit Can Mean Better Job Prospects, Options Are Limited For Customers With Bad Credit, 9 Tips For Job Seekers With A Bad Credit bad credit, How bad credit affects a new marriage