Did you know that your credit history could affect your ability to get a job? Prospective employers are unlikely to turn you down solely for having bad credit, but items in your credit report can make the difference between you and another equally qualified candidate. "Your credit score matters, even if you’re not in the market for credit in the near future, because increasingly prospective employers…will often take your credit rating into consideration when they’re looking at you as a potential employee," cautions Bankrate.com Chief Financial Analyst Greg McBride.
What are employers looking for in your credit report? A credit score alone doesn't help, because that's a single ranking reflecting the overall risk of lending you money. They're hunting for insight into aspects of your personality and behavior, and how those traits will fit into their job opening.
By reviewing the more detailed information in your credit report, employers can address questions like these eight important ones.
1. Do You Have Something to Hide? – By Federal law, employers must ask for your consent before running a credit check. You can turn down that request, but what kind of message does that send? Are you likely to withhold information on the job?
2. Are You Trustworthy? – If you handle your finances poorly, can you be trusted to handle finances at the workplace? People who are responsible with their finances are more likely to be responsible in all aspects of the workplace, including accomplishing their goals and making ethical choices in all situations.
3. Can You Handle Sensitive Information? – If you have delinquent accounts, poor spending control, or other signs of irresponsible behavior in your credit report, employers may think twice about hiring you for any position that requires access to secure data.
4. Are There Legal Concerns? – State laws may require credit background checks for certain positions of public responsibility, like day care workers. In other cases, a credit background check may be considered due diligence to defend against a poor hire. (Good luck if your crooked accountant had a history of personal bankruptcies and delinquent accounts.)
5. Will Finances Affect Your Focus? – If you're so deep in debt that your job performance is likely to be affected, employers may be concerned. Are creditors and debt collectors going to harass you at work? Are your wages likely to be garnished? If your trustworthiness is also in question, employers may be concerned that you will steal from work to get out of financial difficulties.
6. How Do You Handle Adversity? – If your credit report shows that you've gone through a rough stretch and recovered (or are well along in the recovery), this shows resilience, discipline, and resolve – excellent traits in an employee regardless of their position.
7. Are You Heading in the Wrong Direction? – Conversely, if your recent credit activity is worse than your earlier activity, what triggered the decline? Is it just bad luck, or bad decisions? A pattern of increasingly bad decisions suggests that you may make bad decisions at work as well.
8. Are You Honest About Your Situation? – Your credit report paints a picture of you. Do your statements match that picture? Employers will give you a chance to explain any concerning aspects of your credit report. Be prepared to address them directly and honestly – but don't try to downplay a concern or lie about it.
Before your next job interview, check your credit report for any potentially damaging information. (You should be doing this regularly anyway, to make sure there are no errors or signs of fraud that are sinking your credit without your knowledge.) Like every other aspect of your life that may come up in your interview, be prepared to highlight the positive aspects of your credit report and explain the negative ones.
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