Handling a Credit Issue in Your Job Search
By Jeff Lipschultz
As if it’s not hard enough to find a job in tough economic times, companies are starting to put more emphasis on credit rating while selecting candidates.
An article provided by The New York Times has highlighted examples on how job seekers have battled through the job search process only to be thwarted by a bad credit rating.
This certainly prompts the question:
How does a job seeker with a bad credit rating handle this issue professionally and find a job?
Take these 3 steps:
1. Be aware.
Those who have been through major financial challenges are well aware of their “suspect” credit rating. However, many job seekers may not be aware of smaller missteps that have lowered or created some warnings in their rating.
Everyone in the USA is entitled to an annual, free credit check from each of the three consumer credit reporting companies: Equifax, Experian, and TransUnion. It is a good idea to take advantage of this. There are many companies popping up who will offer "extra" services, but the basic, free credit check can be obtained online by starting with AnnualCreditReport.com.
Another good reason to stay on top of this: you might find that there are errors in your credit report history that need to be resolved before applying for new jobs (or applying for a loan).
Many candidates have some less-attractive aspect to their past. These take many forms within work experience, education, legal issues, and sometimes, financial. It is important to realize many employers conduct checks on education/work experience/criminal background. About half of the employers check credit score. However, Federal law requires employers to get the consent from job applicants before running credit checks.
2. Share the news.
If you are working with a recruiter, the # 1 rule always is: "No surprises!" Recruiters need to be aware of anything that might impede your chances of getting the job, including a bad credit rating.
A good recruiter knows the hot buttons for a company. He or she may be able to counsel you on the right time to present this news or whether or not this will be a show-stopper altogether. By discussing this up front, you will have the best chance of overcoming this issue. They may even be able to explore the issue with the employer before you need to bring it up.
3. Discuss with the potential employer.
In many cases, it may not be necessary to disclose your credit issues with the employer until they are serious about an offer. This assumes the job description has not clearly stated certain requirements for credit rating (banking and government jobs may strongly discourage candidates with a poor credit rating from applying).
You will know when a credit check is about to be run—they will ask you to fill out a FCRA (Fair Credit Reporting Act) disclosure and release form. At that point, ask to discuss the issue with the appropriate personnel, likely Human Resources.
You can bring a copy of your credit report with you to show a proactive stance on this issue. You need to be able to discuss the following in a professional and concise way:
- A short background on what instigated any credit rating drops
- How this event(s) was isolated to your personal situation and did not affect your job performance
- What you learned from the experience
- What measures you have put in place to avoid this happening again and how you are raising your credit rating now
Don’t roll the dice.
Employers in the USA are prohibited from discriminating against someone who has filed for bankruptcy under Section 525 of the U.S. Bankruptcy Code. They also are obligated to tell you if credit information is used in their decision to not hire you. However, they may have a secondary reason to reject you as an applicant that is less complicated.
There is no doubt that this is a fairly personal issue and not one we like to talk about. However, without providing your side of the story, the employer will be forced to draw their own conclusions.
If the credit rating is continually coming up as a barrier to getting a job, you might consider working as a contractor through an agency while you fix your credit score over a period of time. With shorter term employment, sometimes the credit score is not a big concern (as compared to employment record, criminal background checks, and education).
In tough economic times, it is not as rare to have unique circumstances that employers may empathize with (perhaps keeping up with medical bills during unemployment). As long as you are up front and honest about your history, you still have a shot at getting the job. Waiting until the employer finds out on their own and makes judgments with half the facts is typically a losing proposition.
For More Information on Credit Reports and Repairing Credit Problems
The US Federal Trade Commission provides detailed information on the process, your rights, and some possible credit reporting scams at FTC.gov. In addition, the FTC provides guidance in building a better credit report, in Facts for Consumers, and correcting misinformation in your credit report in How To Dispute Credit Report Errors.
About this author...
Job-Hunt's Working with Recruiters Expert Jeff Lipschultz is a 20+ year veteran in management, hiring, and recruiting of all types of business and technical professionals. He has worked in industries ranging from telecom to transportation to dotcom. Jeff is a founding partner of A-List Solutions, a Dallas-based recruiting and employment consulting company. He is a unique recruiter with Lean Engineering experience and a Six Sigma Blackbelt. Learn more about him through his company site alistsolutions.com. Follow Jeff on Twitter (@JLipschultz) and on GooglePlus.