Worried about a pre-employment background and credit check? Maybe you should be.
Many employers run a background check, which often includes a credit check, on potential employees before hiring. If you’re offered a job and the hiring process includes a background report, the human resources department must first get your permission before running the check.
If you’ve rented an apartment, the apartment manager probably ran a background check on you before leasing to make sure you’re a good tenant. When a potential employer runs a background check on you before hiring, management is thinking along those same lines.
They want to get a feel for whether you’ll make a good employee or become a hiring decision they regret. A pre-employment background check is one way to weed out applicants with criminal backgrounds, employment they left off their application and those whose frequent changes of employment and address make them seem unstable or fickle.
But a pre-employment background check that includes credit history can also rule you out as a hiring choice. That’s because how you handle financial responsibilities often says a lot about how you may live up to your responsibilities and duties at work.
Worried that a background check might mean you won’t get hired?
Here are the three main credit missteps that can send you back to the job board and what you can do if past money mistakes are holding you back from your dream job.
With a pre-employment background check, the potential employer won’t see your credit score. However, they’ll have access to other telling factors in your credit rating. For example, if you have a history of late payments and collections, that could work against you.
When you have a pattern of not coming through on financial obligations like paying credit cards or loans on time, that could raise a red flag about what kind of employee you would be.
For example, would you show up on time or roll in late when you think no one’s watching? If your credit accounts ended up in collections, are you the type who ignores important emails or misses work on the day your manager schedules a sit-down to discuss your performance?
That assessment may not seem fair, especially if extenuating circumstances that had nothing to do with your character — getting laid off or becoming seriously ill, for example — were the reason you fell behind on payments. Still, negative payment history may be off-putting to potential employers.
Bankruptcies stay on your credit report for up to seven to 10 years. So, if you’ve filed bankruptcy in that time frame, the bankruptcy will show up on the pre-employment credit check report. For the same reasons as other negative payment history, a bankruptcy judgment could make a potential employer think twice about hiring you.
Another thing that could give potential employers pause is if you have a high amount of debt. While the employer ordering the background check won’t see your entire credit report, the check does show how much you owe to various creditors and your debt-to-credit ratio.
If you’re carrying a high amount of debt, you may seem like a risky hire, especially if the position requires you to work around or be in charge of accounting or other financial matters. To many potential employers, someone with a lot of debt may be tempted to steal, possibly embezzling large amounts of money to pay it off.
If a credit check foils your chances of getting the job, the employer is legally required to provide you with a notice of its decision and a free copy of the background report it used to make the decision. Once you get a copy of the background report, make sure you review it carefully.
If you see negative payment information such as an old account that should have dropped off after seven years or an account that shouldn’t have been reported at all, contact the background reporting company and ask them to correct any errors. Ask them to send the corrected report to the employer and then let the employer know it’s on the way.
If you weren’t hired because of a poor credit history or bankruptcy that happened due to job loss, serious illness or another extenuating circumstance, ask the employer for a chance to explain. Once management hears more details about your poor credit history, they may reconsider and hire you anyway.
If you think you weren’t hired because you’re buried in debt, consider meeting with a credit counselor at a nonprofit credit counseling agency for help creating a budget and debt payoff plan so that issue doesn’t haunt you on future background checks.
Find out: 3 Simples Steps to Getting Hired