Could bad credit keep you out of a job?
While some states are looking to crack down on this practice -- Washington, Hawaii and Oregon have regulations in place -- there's not a lot of protection out there for consumers today. It's legal for a would-be employer to use your credit report as an evaluative tool in deciding whether or not to hire you, Adam Levin, chairman and co-founder of Credit.com, tells WalletPop.
"The slightest hiccup any hiring manager encounters, their attitude is 'I'll go to the next one' because there are a lot of fish in the sea," he said.
Incredibly, this means that even if you faced a misfortune like identity theft or a medical crisis and your credit dropped through no fault of your own, this could still be held against you in your job search.
Consumer advocates around the country want to put an end to this practice once and for all. They point to the wide potential for abuse, such as a potential employer seeing how much you owe on your house, cars and credit cards. If you have major medical bills, a hiring manager could discriminate against you by passing you over, and there would be no way to prove it. In the meantime, Levin has some advice for how job-seekers can protect themselves.
First, if the company requires a credit check, don't refuse if you want the job. Refusing to allow a credit check is perceived as a red flag that will get your resume thrown out. If there's bad news on your credit report and you know the employer is going to check, come prepared and address the issue up-front, Levin says.
When the interviewer asks if there's anything you'd like them to know about you or if you have any weaknesses, that's when to give them the heads-up that your credit is blemished. Without going into too much detail or divulging private details (like your medical history), tell the interviewer the reason for your poor credit. If you can be upbeat and proactive about how you're working to turn the situation around, so much the better.
If you're just looking for a job, update your credit report as carefully as your resume. "You have to look at credit like an asset," says Levin. "You have to build it, nurture it and manage it properly." Go to annualcreditreport.com to see each bureau's report, and be proactive at correcting any errors or getting incorrect or out-of-date negative information removed. If credit checks are common in your field, consider signing up for a credit-monitoring service to help you stay on top of your report during your job search.