I Want a New Job. Will Poor Credit Stop Me?

Your credit could, in some cases, affect your job prospects.

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Key points

• Many people are looking for jobs these days.
• While employers don’t automatically check your credit as part of the application process, some might.

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The US economy is loaded with jobs right now, so you may be motivated to get a new one – a role that pays better and offers more opportunity to advance your career.

While a resume is still vital to your application process, it’s not the only document a hiring manager might look at. Some employers require a more extensive background screening that could involve a credit check.

Could poor credit stop you from getting a job?

Having a low credit score could make it so you’re denied a mortgage or credit card. The good news, though, is that a prospective employer is generally not going to see your credit score. That’s because an employer might pull a copy of your credit report, but that report, ironically enough, won’t contain your score itself.

That said, your credit report might contain information that makes an employer hesitant to hire you. Say your credit report indicates you’re behind on different bills and you have a large number of credit cards open with balances on all of them. That could be an indication you haven’t done the most ideal job of managing your personal finances.

Now you may be thinking, “Why does my employer care if my personal finances are a little sloppy?” And in some cases, your employer might not care.

Say you’re applying to an IT job that requires you to be good with computers and networks. In that situation, it’s less likely that negative activity on your credit report would impact your ability to get a job, since the job in question doesn’t involve you managing money. In fact, in this case, it’s less likely that your potential employer would check your credit report at all.

But if you’re applying for a job in accounting, bookkeeping, or any other role that heavily involves money management, then negative activity on your credit report could serve as a red flag. And if you’re wondering whether it’s legal for an employer to reject your job application due to information contained on your credit report, the unfortunate answer is yes.

Some states, however, do limit employers’ ability to use credit checks in hiring decisions. These include California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington.

It’s also worth noting that Delaware restricts public employers only from using credit report information to form hiring decisions. And certain cities, like Chicago and New York City, have their own rules that say employers cannot use credit checks for hiring decisions.

Will you know if your credit report is an issue?

When employers check your credit as part of their screening process, they’re generally required to tell you if you’ve been rejected for a job based on your credit history. From there, you should be given an opportunity to respond to that decision. If you have a history of delinquent bills or large credit card balances due to a recent illness that kept you out of work, for example, that’s something that might lead an employer to reconsider once you give that explanation.

Either way, if you’re applying to jobs that require you to manage money, it pays to check your credit report first and make sure there are no red flags – or try to address any negative activity you see. It’s also a good idea to be on the lookout for credit report errors, like delinquent debts you never actually racked up. Fixing mistakes could spare you from getting rejected from a job in the first place – and it could also put you in a stronger position to qualify for a new loan or credit card when you want one.