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Can Bad Credit Keep You From Getting A Job?

Can Bad Credit Keep You From Getting A Job?

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Once upon a time, in a land not so far from where you’re standing, (heck, it might even be exactly where you’re standing) the only thing a potential employer could know about you was what you put on your resume. Filled with information gleaned through references and the few details you chose to reveal during your interview(s).

Related: Can Bad Credit Make You Unemployable?

Those days are sooooo sooooo over. Today, a potential employer has no qualms about checking your social media profiles (which is why many believe that social media is the new resume). Some people have even reported that potential employers have asked for their social media passwords so that they could get a look at profiles that had been made private.

(NOTE: No matter what a potential employer tells you, you are NOT obligated to share your password. In fact, asking you for your Facebook password (and your sharing it) is a violation of Facebook’s Terms of Service.)

It doesn’t stop with your social media presence or online reputation. Some employers will also go as far as checking a candidate’s credit before they decide whether or not to hire someone. The primary thought behind this practice (while miles away from foolproof) is, “If you can’t be trusted with your finances… how can we trust you for this job?”

How do you like them apples?

Here’s the thing: It might, for lack of better cliché, ‘chap your hide’ that your potential employer wants to do a credit check (and, to be fair, you do not have to allow them to do so… but if you’ve already handed over your social security number you probably can’t stop them from doing it), but having bad credit isn’t just bad for your job prospects. Letting your credit stay bad is terrible for your livelihood and your personal financial health, too. But you already know that.

If all of this sounds like a myth or an urban legend, you need to know that it is not. Last summer CNN investigated the rumors that employers were using credit histories to deny employment. In addition to several interviews, they cited a study that found that one in ten people had been denied a very hoped for job because the potential employer didn’t like what they found when they ran a credit check. Those are some scary statistics! So what do you do? How do you make sure that your credit status doesn’t cost you that job that you need so much?

Dealing With Bad Credit: Where To Start

You’re allowed to request one free credit report from each of the major credit reporting agencies every twelve months. Do that now! Go through your reports and make sure all of the information is accurate. If there are mistakes, dispute the information so that it can be fixed or removed from the report completely.

Now: Look At Your Debt To Income Ratio

When you’re finished throwing up, it’s time to sit down and make a budget. Gather together all of the information you can find about your existing debt and monthly bills.

Add together all of your minimum monthly payments (add 10% to them so that you can actually start paying down your debt instead of letting it sit stagnant) and the highest amount you’ve ever paid for your monthly utility bills, your rent, what you spend on food, and so on. This is how much you have to earn at a minimum every month just to break even. This is why you need that job.

Before you panic, there are things you can do right now to make your budget more manageable.

Reducing Your Debt Before You Pay Your Bills

It is absolutely possible to reduce your debt and the amount of money you pay to your different creditors every month, even before you make a single payment. Here is how you do that:

Call up each of your creditors and ask them for a lower interest rate and a lower minimum monthly payment.

If your accounts are all in good standing, most creditors are willing to do this without giving you too big a hassle over it. If they do hedge or, worse, offer you a higher credit limit, talk to them about potentially closing your account (if that’s possible—sometimes, like with a car loan, it isn’t). Most companies—especially if you’ve been good about paying on time each month—would rather reduce interest and lower payments if it means keeping your business.

If they do say that it would be better to close your account, try to negotiate a lower pay-off amount than what is listed on your current amount due. Some companies will take away any interest you’ve been charged because they would rather get something from you than nothing.

If you aren’t confident in your negotiating skills or if your payment history is sketchy, don’t panic just yet. You might not be able to do all of this negotiating yourself but there are companies out there that you can hire to do that for you.

Credit repair companies exist to help people with bad credit or an overwhelming amount of debt, settle what they owe and make sure that it gets paid off responsibly. These companies act as the “middle man” between you and your creditors to make sure everybody gets paid but at a rate you can afford. Often these companies charge a fee, but you have to weigh credit repair cost against the hassle of trying to do all of that work yourself.

It is important to understand that, in some cases, working with a credit repair agency could be a blemish on your credit record. How big a blemish it is depends on who is doing the looking. Most employers, for example, will appreciate that you’re getting help when you need it and that you’re trying to handle your debt responsibly (instead of trying to declare bankruptcy or something else disastrous).

Once you’ve got your current debt settled, however you choose to do that, and you’re back on financially responsible ground, it’s time to work on building your credit score back up. There are a lot of ways to do this (if you’re working with a credit repair agency, they might have already started you on that path).  This way not only will you never have to worry about what a potential employer will think when he or she pulls up your credit record, you’ll never have to worry about things like mortgages, loans, and so on.

Remember, though, you do not have to allow a potential employer to check your credit. You are absolutely within your rights to say no.

This post was originally published at an earlier date.

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Photo Credit: Shutterstock


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Amanda Green Amanda is a freelance writer who most often writes about personal finance, business, and career. You can read more finance writing by Amanda at paidtwice.com