Credit Repair

Don’t Let Bad Credit Keep You From Your Dream Job

If you’re on the hunt for a new job, you should know that a potential employer may ask to see your credit report as part of a background check.

According to a survey of 1,528 human resources professionals commissioned by the National Association of Professional Background Screeners (NAPBS), 83% of employers surveyed said they perform background checks on all potential full-time employees. Sixty-seven percent of respondents said they screen all part-time employees. Drilling down further, 25% of employers said they checked the credit of at least some prospective employees, while 6% said all job candidates had their credit reports pulled.

While the odds may be that you won’t have to worry about a credit check being part of the hiring process, it is a possibility. Let’s take a look at how you can prevent bad credit from depriving you of your dream job.

Why an employer might want to check your credit history

“Employers look at your credit history as a way to determine the risk in hiring you,” said Leslie H. Tayne, a debt resolution attorney and the founder of Tayne Law Group P.C. in New York.

The biggest risk that employers are looking to avoid, according to the NAPBS survey, is that you’ll pose a danger to their customers and other employees. “They want to make sure you are who you say you are,” Tayne said.

Basic quality control is another big factor. Fifty-two percent of those surveyed by the NAPBS — a nonprofit trade association representing the interests of member companies — cited “improving the quality of hires” as a reason for doing a general background check.

“This is especially common in positions with a financial component to them,” Tayne said. “An employer isn’t going to trust you to handle their finances if you can’t handle your own.”

How you can keep bad credit from hurting you

Before employers can perform a background check or credit check on you, they have to get your consent. But while you can refuse to give consent, doing so may hurt your chances of getting the job. If you think your credit will be an issue, your best bet is to take action.

Here are some steps that you can take to keep your credit score from hurting your job prospects.

Check your credit report regularly

Before you start looking for jobs, it can be helpful to get a copy of your own credit report so that you can see exactly what your potential employers will see.

Thanks to the the Fair Credit Reporting Act (FCRA), which is legislation enforced by the Federal Trade Commission (FTC), you’re entitled to see a free copy of your credit report from each of the three credit bureaus — Equifax, Experian and TransUnion — once per year.

Fortunately, you don’t have to go chasing down three separate reports. The three bureaus have set up a centralized website where you can order all your reports. To order yours, visit AnnualCreditReport.com or call 877-322-8228.

You’ll need to provide your address, Social Security number and date of birth. You may also be asked for additional information, such as what amount you pay each month for your mortgage, as a security measure.

Dispute any errors on your credit report

It’s not enough to know what’s in your report. You need to look for errors, and then take steps to correct them.

To dispute a mistake, the first thing you should do is send letters to the credit bureau and the business that reported the information. State clearly that you’re disputing an item on your report.

The FTC has provided a sample letter. Be sure to include the following information in yours:

  • Your complete name and address
  • Each item you’re disputing, and why
  • Copies of documents that support your position
  • A request that the mistake(s) be removed or corrected

The FTC also recommended sending the letters via certified mail and paying for a “return receipt.”

After it receives your request, the credit bureau has 30 days to investigate your claim. The bureau must forward any relevant information to the business reporting the mistake. The business must then investigate your claim and send its findings back to the bureau.

If the investigation confirms a mistake, the credit bureau must send an updated copy of your credit report to you. If you ask, they’ll also send a notice of correction to anyone who pulled a copy of your report within the last six months and any employers who have pulled it within the last two years.

If no mistake is found, you have the right to ask that a copy of your dispute request gets included in your file with the credit bureau, as well as with any future copies of your report. You can also pay to have copies of your dispute request sent to anyone who has recently pulled your report.

Know what employers can search in your state

All 50 states must comply with the FCRA. Under the FCRA, potential employers must do the following before obtaining a report:

  • Notify you that they may use consumer reports in decisions related to your employment
  • Get your written consent to pull those reports
  • Certify that they are in compliance with FCRA requirements and will not misuse your information or use it to discriminate against you

If your potential employer wants to take adverse action against you, such as deciding against hiring you, they must:

  • Give you a copy of the report that led to the decision
  • Give you a summary of your rights under the FCRA

If your potential employer follows through on that adverse action, based on the information found in the report, they must:

  • Give you a notice that informs you of your right to see the information being reported and your right to dispute it
  • Give you the name and contact information for the company supplying the report
  • Give you a notice that the company supplying the report did not make the decision to take unfavorable action against you
  • Give you a notice of your right to get an additional free report within 60 days, if you ask for it

That said, several states hold even stricter laws, regulating what an employer can and cannot do with your credit report. It is in your best interest to look up the laws in your state so you know exactly what protections are being afforded to you.

Be prepared for questions

If your potential employer does find something on your credit report, there’s a chance that they may give you the opportunity to explain. In that case, you should be prepared to answer any questions that may be asked of you regarding your financial situation.

However, Tayne recommended taking things a step further and getting out in front of the issue, before your potential employer even has a chance to look at the report.

“Be honest,” she said. “Explain what happened as soon as you can.”

“It looks better if you take the steps to say, ‘Listen, this is what you’re going to find and this is what happened. I don’t want it to impact your hiring decision,’” she said.

Get your finances in a better place

The first step to getting your finances in a better place is educating yourself on the specifics of your situation, no matter how painful it may seem.

According to Tayne, building that understanding is key. “You have to understand what’s on your credit report and what your financial goals are,” she said. “Understand what your bills are and your ability to pay them.”

The next step is to take action.

“If your outstanding balance is small enough that you can pay it off, do it right away,” Tayne said. “If not, work with your creditors to come up with a payment plan and make it a point to make your payments on time.”

If your debt comes from a few different sources, consolidating is also an option. You can use a personal loan to consolidate all your debts into a single, monthly payment.

If you’re not comfortable handling this process on your own, there’s no harm in reaching out to others for assistance. “Seek help,” Tayne said. “Use a financial attorney to help get yourself back on track.”

In the event that you cannot afford an attorney, the National Foundation for Credit Counseling can connect you with someone who can give you personalized advice. Many counselors are nonprofit or charge only a small fee for their services.

Bottom line

While it’s true that having bad credit can hurt your employment prospects, there are things you can do about it.

Get a copy of your credit report and educate yourself on what’s wrong. Then, form a plan of action. If you work diligently to meet your obligations and make your payments on time, you could see improvement in your credit in just a few months.

 

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