by Katerina Nikolas

Created on: May 28, 2010

To be very blunt, a bad credit report can cost you a job. Employers have a legal right, with your permission, to pull your credit report and use it to make a judgement if you are likely to be a good prospect. The practice is controversial and a bill currently sits in congress trying to limit the use of credit checks by employers to only those positions where it is deemed to be essential.

Using credit reports to assess applicant’s characters and suitability leaves the applicant’s credit history open to interpretation by the employer. Many of the arguments used in making a judgement based on a credit file are sweeping generalizations. Having bad credit does not mean that an applicant is more likely to steal from the employer, or commit fraud. Being late with several payments does not mean an applicant will then be late for work. However employers can judge an applicant as such without knowing if there were any reasons behind the bad credit report and just make the assumption that bad credit indicates lack of responsibility by the person.

A major fault of using credit reports as a judgement call is that the current credit score is not actually revealed to the employer by the credit bureau. A credit report can show late and missed payments going back 7 years and it is perfectly possible that a blip several years ago which has now been rectified, leaving an applicant with a good current credit score, may not be considered by an employer. Employers though are not allowed to discriminate against applicants who have a bankruptcy in their past.

Without doubt there are some job positions where it is essential that an applicant be credit checked first. Anyone seeking work in the financial sector should have a clean credit report, and in other positions where dealing with sensitive information is called for then sizeable debt may well pose a problem. Carrying debt could leave a person more open to selling information on.

It is imperative that if you are seeking employment or a change of job that you know what information is on your credit report, and that you ensure any errors are removed. If you know your credit report could let you down but there are valid reasons then use the opportunity to raise it in the job interview. There is no point feeling the interview went well and then losing the position based on information which you could have clarified at the time. There isn’t anything really to say if you are an habitual late payer with a string of debts, but if you experienced a temporary blip through perhaps divorce, illness or another valid reason, then raise it.

If you do lose a position because of your credit report then legally the employer must let you know this in writing. Whether they bother may well be a different matter.

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