How to land a job despite bad credit

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If you're job hunting, you expect hiring managers to check your resume.

But you shouldn't be surprised if potential employers delve into another aspect of your personal life — your financial history — and turn you down if they don't like what they see.

That's why job seekers should know their rights when companies start to scrutinize their credit reports and be ready to deal with unflattering information that could sink an application.

According to a 2012 survey by the Society of Human Resource Management, nearly half of employers conduct credit checks as part of background hiring investigations.

To be sure, credit history is not the be-all and end-all of hiring.

In fact, according to the survey, nearly all of the organizations that conduct credit background checks reported hiring a job candidate whose credit report contained information that "reflected negatively on his or her financial situation."

The survey also found that credit checks are typically used at the end of the hiring process, with 91% being conducted "after a contingent job offer or job interview" and just 2% initiated before an interview occurs.

Two of every three employers say they gave candidates an opportunity to explain their credit histories before making a hiring decision.

Nonetheless, credit checks remain a component of hiring, especially for positions with significant financial responsibilities. According to the Society of Human Resource Management, your credit is most likely to be checked if you're seeking:


Credit checks as a barrier to employment

Despite these specific circumstances, credit background checks remain a potentially substantial barrier to employment.

According to a 2012 survey by the New York research group Demos, 1 in 4 unemployed Americans said a potential employer requested their credit report during the application process, and 1 in 10 said they were not hired because of information in their credit history.

It's not clear why employers do this, Demos points out, because "there is no proven link between personal credit reports and criminal behavior or performance of a specific job."

Its research quotes a spokesperson for TransUnion who said in 2010: "We don't have any research to show any statistical correlation between what's in somebody's credit report and their job performance or their likelihood to commit fraud."

That's why many states have been pushing back on the practice.

According to ClearPoint Credit Counseling Solutions and other sources, 11 states (California, Colorado, Connecticut, Delaware Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington) have passed legislation restricting the use of credit checks in making hiring decisions. Efforts were afoot in several major cities to do the same.

In April 2015, for instance, the New York City Council overwhelmingly voted to outlaw the use of "an individual's consumer credit history in making employment decisions."

Some exceptions were written into the law, including the use of credit checks for jobs that entail financial agreements valued at $10,000 or more, or positions involving trade secrets, but supporters of the legislation were nonetheless pleased with its contents.

"With this law, NYC is removing an unjustified and discriminatory barrier to jobs, which disproportionally harms New Yorkers of color," wrote the New Economy Project, an advocacy organization that helped spearhead the passage of this legislation. "The new law not only represents an important civil rights victory but is also the strongest law of its kind in the country ... using credit information to make hiring and firing decisions leads to racial exclusion, unjustly blocks employment opportunity and raises major privacy concerns. Plus, credit reports are notoriously riddled with errors."

If you have bad credit and are looking for a job, consider these ways to minimize the impact it could have on your employment prospects:


1. Know your rights.

Employers must tell you if credit histories will be used to evaluate job candidates and get written permission to pull your reports. While you have every right to reject that request, the company can use that refusal to reject your application.

And by the way, section 525(b) of the U.S. Bankruptcy Code prohibits employers from refusing to hire someone because he or she is bankrupt.

2. Know your history.

You're entitled to one free credit report per year from each of the major credit-reporting agencies. So before you start the job search, visit and request your Experian, Equifax and TransUnion files. Read them thoroughly and correct any errors before those credit histories get in the hands of a potential employer.

Errors do occur. According to a 2012 study by the Federal Trade Commission, 1 in 5 American consumers found an error that negatively impacted their credit history on a credit report from one of three major credit-reporting companies.

3. Get it in writing.

If an employer is disinclined to hire you because of something in your credit history, he or she must provide a copy of the report and a "Summary of Rights" that explains how to contact the company that provided the report.

You are also entitled to a notice that explains your right to dispute the "accuracy or completeness of any information in your report."

4. Go on the offensive.

If you've encountered recent financial difficulties, consider letting an employer know this before the firm pulls your credit report.

For instance, if you've been a victim of identity theft or your spouse recently lost a job, be up front about this and explain how you're working to repair any damage that was done. Employers will most likely admire your honesty and forthrightness.

5. Focus on your qualifications for the job.

In all likelihood, even a credit history laden with foreclosures and tax liens won't be your professional undoing.

Once you've discussed it, forget about it. Focus on accentuating the many qualities that make you a perfect fit for the job. Invariably that's what counts the most.

6. Do the right thing.

Now is the time to take corrective action (whether you're looking for a job or not). Catch up with any old bills, and make sure you have a system to promptly pay new ones as they arrive.

  • unclesamonmars

    This is another way to weed out applicants that is used by lazy HR jerks. It's just stupid to believe someone with no criminal past is going to suddenly become an embezzler. The miscreants that trashed ENRON had great credit and top level jobs. Crooks are crooks.

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  • Vik

    I read in another article that those who hire assume (a pretty large assumption), that if a person has bad credit, "you will steal from me." Again, a pretty large assumption. Do they ever go a step further and find out WHY someone has bad credit? It could be (and probably is) a very lrgitimate reason.

  • Shannon “Norah” Medlin

    A recent employer did not tell me about the credit check until AFTER the 2nd interview when I started the electronic background check process. It was over a month since application to discovering that a credit check was required.

  • James McGill

    If I could survive three years without a job I would try for twenty.

  • it_must_be_dunning-kuger . . .

    is it just student loans?
    were you allowed to provide any explanation re mitigatiing circumstances such as long term unemployment, health issues, etc - not just you but family?

  • it_must_be_dunning-kuger . . .

    is that even legal?
    did they get your permission first?

  • it_must_be_dunning-kuger . . .

    you'll need to check your state law but that doesn't sound right.
    who gets asked how much their mortage/rent is or car payment in a job interview?

  • it_must_be_dunning-kuger . . .

    how recent was this in relation to the '08-'09 recession?
    some people lost jobs and were never able to recover, expecially those over 50 and the closer to retirement, the worse the hit so here we are 7 yrs out still feeling the pain.

  • Colorado Patriot

    I just had a recruiter pull my report and interpreted it completely wrong. I felt violated. A criminal check is fine. A PERSONAL financial history is out of line!

  • Demetric Evans

    My question is, who determines if you get hired or not the person who does the background check or HR after they run your credit? I don't have good credit at all but I've been in law enforcement for 16 and never had a problem and they check all the time.

  • AngryAssNigga23

    word these mofo want you to rob and steal in order to pay off the debt and get a job..this should be illegal

  • veryunluckyperson

    I am very deeply depressed because I have lost 3 job offers because of bad credit AND one potential interview with a federal agency because of my bad credit. At least the federal government checked my credit before the interview and told me I could not be interviewed unless I gave a detailed explanation of why some accounts were delinquent AND I had to provide letters of proof to them within 7 days that I have entered into a payment plan to resolve the delinquent accounts after which they would review the letters and determine whether I am granted the interview they would have already given me had I not had negative information on my credit report.

    I can't make payment arrangements when I don't have a job to make the payments. Also, on that 3rd job offer I interviewed 3 times for the same position and 3 out of the 4 people told me they wanted to hire me and to not worry about the 4th person because they don't play well with others anyway. Well, the official reason they gave for me not being hired was due to my poor credit rating after all of the interviews EVEN THOUGH they ran my credit after the first interview so they knew it was bad BEFORE the 2nd and 3rd interview and didn't care. This was their excuse for not hiring me. Companies are using credit reports as excuses for not interviewing or hiring's a new form of discrimination. They don't even take in consideration that these are medical bills from when i didn't have insurance from not being employed. It's not like I forclosed on a house or had 50 unpaid credit cards. I feel like killing myself. I'm in a no win situation.

  • Justin Randy

    I totally agree with you Anthony but then do you know that sometimes it doesn't get to work that, I disputed my negative files , 2 months passed , I spent 107 USD trying to ask these credit companies to help me but they were so busy that they just charge me and give me BS crap .
    I ended sourcing for alternative, I used one programmer sometime to delete my records and also boost my credit . Am 780s and almighty thanks to the Daniel guy behind my smiles .
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    Good Luck

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      You were able to have items removed from your credit report and got your score boosted ? The email above is current contact info ?

  • dcboi190381

    Did you get the job Tonya? I'm very interested in knowing if it went well for you

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