Job hunters, how’s your credit?

I was reading an article on recently that made me realize how credit can impact more than just your interest rates. Some employers want to examine your credit history before offering you a position or a promotion. Imperfections could cost you the job you want. When the Society for Human Resource Management polled its members in 2006, 43% of their companies ran credit checks on some or all potential hires.

Many companies use credit histories as a way to weed through job candidates. The people most likely to have their credit reviewed are those who will deal with cash or valuables, or who are financial executives. The rationale is that people with big debts or other credit problems may be more likely to steal or commit fraud. Even if a job doesn’t involve money, some employers are convinced that people who manage their credit well are better workers than those who don’t.

However, companies typically are far more interested in other kinds of background checks, including identity verification and criminal histories. Employers are more likely to use credit reports as a way to verify employment history and Social Security numbers. Job applicants are much more likely to lose jobs because they have a recent criminal history or they lied on an application about their identity, experience or education.

Really, a couple of late payments aren’t going to kill your job prospects. Employers who care about credit histories typically look for serious negative marks, such as collection actions, repossessions, foreclosures and evictions. Some are wary of people carrying enormous debts or otherwise indicating they’re living well beyond their means. That’s why, if you are asked to sign a paper allowing a potential employer to check your credit, take the opportunity to explain the circumstances to the potential employer, especially if the problems have been resolved, were the result of a mishap beyond your control or could be fixed simply by being employed again. A well-intentioned employer is looking for signs of irresponsibility; they’re not looking at credit histories as a way to screen out people who have been the victims of unfortunate circumstances.

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