Can a Bad Credit History Cost You a Job?
Maintaining a good credit score is important for financial well-being. A good or excellent credit score can unlock more financial opportunities for you — including access to loans with low interest rates, a higher chance of being approved for a mortgage with favorable terms, etc. However, it’s easy to find yourself stuck in debt if you misuse credit cards, which will hurt your credit score.
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Having a bad credit history can adversely affect not only your finances, but also your employment opportunities if you’re subject to an employer credit check.
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What Is A Credit Check For Employment?
Monster.com explained that a credit check for employment is sometimes part of a job screening and involves an employer checking a condensed version of your credit history to see how you’ve dealt with debt. It includes your payment records, how much money you owe (including credit card debt, mortgages, student loans, etc.), as well as your available credit lines. However, your credit score and any information that would violate your equal employment opportunities, such as account numbers and your date of birth, will be omitted.
Credit checks are typically part of the employer background check process. As with any other institution that’s requesting to check your credit history, you must give consent, you’ll have a chance to explain yourself if there are any negative findings, and you’re entitled to a copy of the report.
US News & World Report highlighted that employer credit checks are subject to the same rules as credit checks for loan and credit card applications under the federal Fair Credit Reporting Act. This law protects individuals when it comes to institutions checking on your credit history.
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Why Do Some Employers Check Your Credit History?
There are several reasons why employers may want to check your credit history:
To hire better quality applicants.
To protect the company’s employees and customers.
To preserve the company’s reputation.
It’s worth noting that employer credit checks are “soft,” meaning that your credit score isn’t negatively affected, unlike a hard credit check.
A poor credit score could reflect negatively on you and has the potential to affect your employment opportunities. However, it’s never too late to improve your credit score and get back on track financially.
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This article originally appeared on GOBankingRates.com: Can a Bad Credit History Cost You a Job?
