Bad Credit and Job Hunting

May 8, 2014 by

range of credit scoresMany employers these days require job applicants to give consent for a credit check. Bad results often mean no job offer, period, with no opportunity for an explanation or additional input offered to the applicant. This common practice makes it even tougher to recover from a short-term financial crisis, emphasizing the importance to we consumers of doing our best to protect ourselves from hits to our credit in the first place.

People With Poor Credit Who Want to Work Often Can’t

Check out this short video of a gentleman who suffered an injury while he didn’t have health insurance (a big mistake, and he paid a big price). He couldn’t work for a while and then couldn’t pay his medical bills, so he filed for bankruptcy. Now he’s ready and motivated to return to work, but can’t find a job because of the bankruptcy on his credit report. Here’s a direct link if the video below doesn’t work for you.

The Numbers on Credit Checks and Employment

Here’s a background graphic from the report “Discredited: How Employment Credit Checks Keep Qualified Workers Out of a Job“, by Amy Traub:

credit checks and employment

Looks like 10% of the unemployed might have found work if not for poor credit. I wonder how much related social supports are costing taxpayers?

Expansion of Use of Pre-Employment Credit Checks

Once upon a time employer credit checks of job applicants were used only for positions involving access to company money. The rationale was that people under financial strain might irresistibly be tempted to dip into their employer’s resources. But many employers today have bought into the marketing of the credit reporting bureaus that sell credit checks. For example, check out these excerpts from Experian marketing materials”

Credit information provides insight into an applicant’s integrity and responsibility toward his or her financial obligation.

Every time you hire a new employee you put a lot on the line. The wrong decision could jeopardize your firm’s assets, reputation, or security.

This is the sales pitch despite a representative of credit reporter TransUnion telling the Oregon legislature 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.”

How About You?

Have you or anyone you know lost out on consideration for a job purely because of credit? Do you think a person’s credit history should play a role in the job application process?

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  • Travis Pizel

    I would hope that employers are smart enough to figure out when the information is applicable. As a software engineer, I would hope prospective employers would take former job experience and performance as much more important than my credit report info. I mean what’s next? Engineers are supposed to be orderly and logical..are they going to come and see how clean my house is, or how straight the rows are when I mow my lawn?

  • I’ve heard of employers checking credit scores but it’s never happened to anyone that I know. There may be some cases in which that information could be useful or relevant but to me it just makes no sense. Maybe it’s because it really doesn’t make sense for my industry but I don’t know why this would ever matter for the majority of jobs out there.

    • I don’t know either Zee. At least part of the explanation is that the companies that sell credit reports have worked hard through their marketing to create a perceived need in employers’ minds.

  • It’s really not fair that people who have bad credit scores can’t get any job solely because of that. I find it ridiculous that someone actually thinks that there’s correlation between someone’s credit scores and his/her work integrity, especially when there’s no study to back it up. Even then, they should know the reason behind someone’s bad credit scores before they decide not to hire him/her.

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