More employers checking credit histories

Figures holding magnifying glass over credit report

Falling behind on your credit card payments, defaulting on an auto loan or losing your home to foreclosure could cause you to be turned down for a job.

A 2009 study by the Society for Human Resource Management found 60% of employers use credit checks when filling at least some positions.

That's up from similar studies showing 35% of employers ran credit checks in 2003 and just 19% in 1996.

Why do employers care?

Some think a bad credit history demonstrates a lack of judgment or character that can carry over to the workplace.

Others worry that job applicants with lots of unpaid bills are more likely to steal from the company, especially if the work involves handling cash.

That's not necessarily true.

An Eastern Kentucky University study conducted in 2003 found no clear connection between job performance and an employee's personal financial history.

Job applicants also can have a damaged credit history because of an illness or layoff that doesn't reflect their ability to be a good employee.

Laws to limit employment-related credit checks have been passed in Hawaii, Oregon and Washington, and are under consideration in many other states.

Where not limited by law, a credit check can be perfectly legal as long as the applicant is informed it's being done, and candidates can be turned away based on what that credit history reveals.

If your credit is less than perfect, find out what goes into your credit score and the 7 smart moves to improve your credit score.