Jobs You Need Good Credit to Get

Good credit has the potential to open the doors to many different opportunities in your life. With good credit, you typically have a better chance of qualifying for loans, credit cards, and other types of financing. Good credit may also help you save money on interest rates and insurance premiums. Yet many people fail to realize that good credit might also make it easier to get certain types of jobs.

Some employers use credit checks as part of the background check process to evaluate potential job applicants. Reviewing credit is more common in certain professions than in others and some states restrict the practice. Still, reports show that around half of employers in the United States review credit information as part of their hiring process.^[1]

Of course, if you have bad credit you may worry that those issues could disqualify you from getting hired for a job or promotion. And while there’s no minimum credit score requirement for getting a job (employers can’t see your credit score), bad credit could cost you employment opportunities in certain situations.

The following guide will help you understand why some employers use credit reports for employment screening purposes. You’ll also learn more about the types of jobs that commonly consider credit details, how to prepare for a pre-employment credit check, and whether you can still get a job with bad credit.

Why would an employer check your credit?

Many employers perform a basic background check when you apply for a job. This process may include verification of personal details, employment history, criminal record, level of education, and other information that could impact hiring decisions.

On top of a background check, it’s common for some employers to go a step further and review the credit history of job applicants as well. For the most part, a credit report shows information about past and present credit obligations (e.g., credit cards, loans, etc.), including payment history on those accounts, credit limits, and other key details.

Lenders may access copies of a consumer’s credit reports from the credit bureaus (Equifax, TransUnion, and Experian) to help judge the risk of loaning an applicant money when they apply for financing. In a similar manner, employers may check credit reports to help make more informed decisions regarding whether to hire or promote prospective applicants. It’s all about risk assessment.

From an employer’s point of view, a credit check may help them protect their business from unknown risk. In such situations, an employer may use a credit report to avoid hiring a potentially untrustworthy or unproductive employee.

Employers may use pre-employment credit checks to:

• Verify the identity of an applicant. Using the identity verification tools that credit reports provide can help employers detect potential fraud. If someone tries to use a phony name, or Social Security number on their job application, checking that person’s credit history might help the employer discover the truth.^[2]
• Assess the overall reliability of a job applicant. If your credit report shows a history of well-managed accounts, an employer might feel more at ease about your ability to handle business accounts, transactions, and other tasks.
• Look for signs of financial distress, like recent missed payments or past-due balances. Financial stress could lead to several potential problems in the workplace. A recent report by TIAA Institute found that financially stressed employees are around five times more likely to be distracted by money while at work and those same workers miss around twice as many days per year as their unstressed coworkers.^[3] Another study by the Association of Certified Fraud Examiners found that financial problems and living beyond a person’s means were the top two causes of workplace theft.^[4]

Of course, it’s worth mentioning that some consumer advocates argue against the fairness of using credit checks for employment screening purposes. Poor credit doesn’t definitively prove that a person will be a less reliable worker or steal from their employer, after all. (There are plenty of good employees who have bad credit.) And in many cases, bad credit may be a result of job loss, illness, or other unfortunate circumstances.

For these reasons and others, the federal government regulates the use of pre-employment credit checks. Some states also restrict the practice. (See below.)

What information can employers see when they check your credit?

The Fair Credit Reporting Act (FCRA) is the federal law that sets the rules around who is allowed to access your credit information. According to the FCRA, employers may review your credit report for employment purposes. However, employers cannot access your credit score. (Although this is a common credit myth.)

There are also two noteworthy rules that the credit bureaus must follow when disclosing your credit details to employers.

• An employer must have your written permission before accessing your credit information.^[5]
• Employers can only view limited versions of your credit details, not your full credit report.^[6]

The credit reports that employers access for pre-employment screening may include the following types of information.

Source: Experian^[6]

Note that when an employer checks your credit report through any of the three major credit bureaus (Equifax, TransUnion, or Experian), only a soft credit inquiry occurs. As a result, pre-employment screening credit checks won’t have any negative impact on your credit score.^[7]

States that ban pre-employment credit checks

Although federal law gives employers the ability to access credit reports with permission, certain states (and major metropolitan areas) restrict credit checks for employment screening. Below is a list of states and cities where pre-hiring credit checks are currently limited or off limits.

States:

• California
• Colorado
• Connecticut
• Delaware (for public employees)
• Hawaii
• Illinois
• Maryland
• Nevada
• Oregon
• Vermont
• Washington

Cities:

• Chicago
• New York City
• Philadelphia

Source: Chase^[8]

If you’re unsure whether pre-employment credit checks are permissible in your area, you can check with your state labor department or city government office for more information.

Types of jobs that require credit checks

Many employers use credit checks as part of the pre-screening processes to review new potential employees. But pre-hire credit checks may be more likely in certain industries.

For example, credit checks tend to be more common if you’re applying for a job that requires you to deal with sensitive subjects like data, proprietary corporate information, or money. Likewise, you might face a pre-screening credit check if you apply for a job that requires a security clearance.

Below are a few examples of jobs where employers might require pre-hire credit checks.

Military jobs

When you apply to join a branch of the armed forces, it’s no surprise that you need to prove you’re physically fit enough to enlist. Yet you may need to pass a background check when you enlist in the military as well—including a potential credit check.

You typically don’t need spotless credit history to join the military. However, many military jobs require security clearance which could involve a credit check. If you have poor credit that shows excessive indebtedness, a history of not paying debts, or other serious financial problems, you might have trouble getting approved for (or keeping) security for certain military positions.^[9]

Good credit might also make it easier to advance in your military career. (At the very least, good credit won’t stand in your way if you’re eligible for a promotion.) So, if you’re a Servicemember, it’s important to pay close attention to your credit report and make sure you keep it in the best shape possible.^[10]

Law enforcement, government jobs, and border patrol

If you plan to apply for a job with the U.S. or a state government, border patrol, or you want to work as a law enforcement officer, a thorough background check is typically a standard requirement. As part of your job application, you can likely expect a credit check to take place. And you may need to be ready for additional credit checks anytime you seek a job promotion that requires a higher security clearance in the future.

According to Yale Law School, applicants for federal positions (including volunteers and interns) have to complete a suitability review. The review process requires a National Agency Check with Inquiries (NACI) which includes a credit check plus a National Agency Check, law enforcement check, records search, and written inquiries to verify previous and current employers, education, residence, and references.^[11]

The FBI does state that poor credit history alone won’t automatically disqualify a candidate from receiving security clearance. However, resolving bad credit could take additional time. And in the case of severe credit or financial problems, an officer might not be approved for clearance.^[12]

Prison workers

Like other government workers, employees who work for federal and state prisons need to be trustworthy. Financial problems could potentially make a prison worker more susceptible to bribes—a legitimate concern in the prison industry. As a result, pre-employment credit checks are common in this line of work.

According to the Federal Bureau of Prisons, employment with the agency is subject to the successful completion of a background investigation. Among other steps (e.g., criminal record check, personal references, inquiries to previous employers, etc.), a satisfactory credit check is part of the hiring process.^[13]

Jobs in financial services

If you’re applying for a job that requires you to help other people or businesses manage their money, personal credit problems could be especially problematic. It’s common for companies to check your credit when you apply for financial services roles. So, if you’re seeking a job as an accountant, a financial planner, a broker, or a loan officer, there’s a good chance the employer might check your credit report as part of the pre-employment screening process.

Keep in mind that some financial service industries have licensing requirements as well, and these might include a credit check. For example, if you want to become a licensed mortgage loan originator, some states may require a credit check as part of the background check process to confirm that you’re fiscally responsible.^[14]

Legal jobs

Lawyers, paralegals, executive assistants, and other law firm employees often handle client money and may have access to the sensitive financial information of other people and businesses. As a result, law firms are another type of business that may conduct credit checks before they hire new employees.

It’s also worth noting that bad credit could become a problem for law students before they ever receive their license to practice law. These potential issues may arise because when a law student applies to the Bar in certain states, a credit report review might be as part of the application process.

State boards may conduct character and fitness reviews on Bar applicants. On a positive note, you typically don’t need perfect credit to become a licensed attorney. But severe negative credit history that shows financial irresponsibility could be problematic. For example, if your credit report shows unpaid collections, you may need to set up payment plans and demonstrate at least six consecutive months of payments before your application to the Bar can move forward. It’s also important to bring any past due child support payments current.^[15]

Casino workers

If you want to work in a casino, there’s a good chance you’ll need to pass a credit check when you apply for a job. Each casino has its own employment policy. Yet since many casino jobs involve working with money, it’s common for employers to require credit checks. And if you have bad credit history, getting the job you want (or a promotion), might prove difficult.

It’s also worth pointing out that Nevada is one of the states that doesn’t allow employers to use credit checks for hiring decisions. But the state makes an exception when it comes to gaming institutions. So, if you’re planning to apply for a job at a casino in Las Vegas, pre-hire credit checks are typically fair game.^[16]

How to prepare for an employment credit check

Not all employers will check your credit when you apply for a job. But since 50% (or more) of employers check credit as part of the hiring process, it’s wise to be proactive and take steps to prepare ahead of time for a pre-employment credit review, just in case. Here are some tips that may help you.

1. Check your credit reports

Before you apply for a new job, it’s wise to review your three credit reports from Equifax, TransUnion, and Experian. A prospective employer could review your credit report from one or more of the credit bureaus when you apply for a job. So, it’s helpful to be familiar with the information on your credit reports upfront and verify that your data is accurate.

If you find an error on your credit report, you have the right to dispute it with the appropriate credit bureau(s) and creditors. But negative, accurate information can remain on your credit report for as long as seven to ten years.^[17] So, you’ll want to make a plan to take care of those credit issues (where possible) and address them with prospective employers. (See below.)

2. Pay bills on time

Even though employers don’t review your credit scores, the payment history on your credit reports still provides insight into whether or not you honor your financial obligations as promised. Therefore, it’s important to try your best to pay your bills on time every month. If you’re between jobs, try calling your creditors and see if they’re willing to work out a temporary hardship agreement to pause or delay your payments while you search for new employment.

3. Avoid over utilizing credit cards

Excessive credit card debt could be concerning to employers. So, it’s important to keep an eye on your credit card utilization ratios and make sure you’re not using too much of the available credit limits on your accounts. Not only can a high credit utilization ratio be bad for your credit score, it could also be a bad look to prospective employers.

If you’re carrying a large amount of credit card debt, try to pay down your credit card balances before you begin the job hunting process. Keep in mind, the debt avalanche method could be helpful if you’re working to pay down several credit card balances at the same time.

4. Write an explanation letter

If you have derogatory items on your credit report, you may want to consider writing a general explanation letter for prospective employers. This letter can include details about the financial hardship you experienced and how you’re trying to improve your situation now.

For example, if your credit report shows a history of late payments and medical collections, your letter might explain how an illness kept you out of work and led to a period of unusual debt activity. Likewise, if you made financial mistakes in the past but you’re working to pay off debt and build credit, your letter could detail the steps you’re taking to move forward.

Can you still get a job with bad credit?

Although many employers perform credit checks during the hiring process, there are plenty of companies out there that skip this step. Most entry-level positions don’t require a credit review. Several states and cities also have laws that restrict the use of credit reports for hiring decisions.

Even among companies that review credit, you may be able to overcome the potential red flag of a bad credit report by being upfront. If an employer asks for permission to check your credit report (or asks questions about your credit history), be honest about any past financial missteps you may have made. If you’re a good candidate for the position, there’s a chance an employer might be willing to overlook a less-than-perfect credit report—especially if you can show that you’re working to move forward.

Bottom line

Good credit has the potential to expand your access to job opportunities. Even if your current job didn’t require a credit check, you never know what the future may hold.

Therefore, it’s wise to do your best to earn and maintain a solid credit profile. If you ever need to rely on your credit in the future for a job application, a loan application, or something else, you’ll be in great shape.

Sources

1. Urban.org. “Preemployment Credit Checks: Employer Practices, Worker Outcomes, and Implications for Practice and Research.” https://www.urban.org/research/publication/preemployment-credit-checks-employer-practices-worker-outcomes-and
2. Experian.com. “Employment Insight.” https://www.experian.com/content/dam/marketing/na/assets/consumer-information/product-sheets/employment-insight-product-sheet.pdf
3. TIAA.org. “TIAA Institute report finds ties between financial stress and mental health.” https://www.tiaa.org/public/institute/about/news/tiaa-institute-report-finds-ties-between-financial-stress-and-mental-health
4. SHRM.org. “Why Is Workplace Theft on the Rise?” https://www.shrm.org/topics-tools/news/employee-relations/workplace-theft-rise#:~:text=%22The%20top%20two%20reasons%20%5Bfor,valuable%20from%20a%20fraudster's%20perspective
5. Equifax.com. “9 Things You May Not KNow About the Fair Credit Reporting Act — But Should.” https://www.equifax.com/personal/education/credit/report/articles/-/learn/9-things-you-may-not-know-about-fair-credit-reporting-act/
6. Experian.com. “Why Do Employers Check Credit?” https://www.experian.com/blogs/ask-experian/why-employers-check-your-credit-report-and-what-they-see/
7. Chase.com. “Credit checks for employment.” https://www.chase.com/personal/credit-cards/education/basics/employer-credit-check
8. Chase.com. “Can you get a job with bad credit?” https://www.chase.com/personal/credit-cards/education/credit-score/can-you-get-a-job-with-bad-credit
9. DNI.gov. “Security Executive Agent Directive 4.” https://www.dni.gov/files/NCSC/documents/Regulations/SEAD-4-Adjudicative-Guidelines-U.pdf
10. ConsumerFinance.gov. “Credit reports and military service.” https://files.consumerfinance.gov/f/documents/cfpb_ymyg-servicemembers-tool_credit-reports-military-service.pdf
11. Law.Yale.edu. “Before You Apply: Understanding Government Background Checks.” https://law.yale.edu/student-life/career-development/students/career-pathways/public-interest/you-apply-understanding-government-background-checks
12. LE.FBI.gov. “Security Clearance for Law Enforcement.” https://le.fbi.gov/informational-tools/security-clearances-for-law-enforcement#:~:text=A%20poor%20credit%20history%2C%20or,a%20clearance%20from%20being%20approved
13. BOP.gov. “Our Hiring Process.” https://www.bop.gov/jobs/hiring_process.jsp.
14. ConsumerFinance.gov. “Minimum loan originator license requirements.” https://www.consumerfinance.gov/rules-policy/regulations/1008/105/#d-1
15. GABarAdmissions.org. “Policy Statement of the Board to Determine Fitness of Bar Applicants Regarding Character and Fitness Reviews.” https://www.gabaradmissions.org/policy-statement
16. GGRMLawFirm.com. “Understanding Nevada’s Pre-Employment Screening and Testing Rules.” https://ggrmlawfirm.com/blog/legal-updates/understanding-nevadas-pre-employment-screening-and-testing-rules/
17. myFICO.com. “Chapter 7 & 13: How long will negative information remain on my credit report?” https://www.myfico.com/credit-education/faq/negative-reasons/how-long-negative-information-remain-on-credit-report

About the author

Michelle Lambright Black is a nationally recognized credit expert with two decades of experience. She is the founder of CreditWriter.com, an online credit education resource and community that helps busy moms learn how to build good credit and a strong financial plan that they can leverage to their advantage. Michelle's work has been published thousands of times by FICO, Experian, Forbes, Bankrate, MarketWatch, Parents, U.S. News & World Report, and many other outlets. You can connect with Michelle on Twitter (@MichelleLBlack) and Instagram (@CreditWriter).

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