Every day, you hear about someone who got fired because of a social media post. Now, prospective employees have to check all their social media profiles and see if there’s anything that would make them unemployable. It used to seem crazy that companies checked people’s Instagram and Twitter accounts, but now it’s the status quo.
If you think having a potential boss check out your Facebook profile is weird, consider the following: many companies check their job applicants’ credit, especially for sensitive jobs.
It can be a scary prospect for people who don’t have the best credit. Some people worry that having poor credit disqualifies them for most positions or prevents them from getting promoted. The short answer? In some cases, it could.
Read on to see why employers check your credit and what kind of jobs you need good credit to get.
Many employers conduct a basic background check for all potential employees that verifies an applicant’s employment history, criminal record, level of education and more and impacts hiring decisions.
This is standard operating procedure for many jobs, but some companies take it a step further by requesting a pre-employment credit check. This lets the employer see an applicant’s credit report, including defaults, judgments, late payments and more. It’s very similar to what a lender sees when they pull a credit report for a prospective borrower.
Some firms believe that credit history is indicative of a candidate’s future work performance. The idea is that bad credit could reveal certain undesirable personality traits, like a lack of personal responsibility. Companies who use this approach may assume that a person who makes late payments on their credit card may have a similar attitude towards work assignments and deadlines.
Some research even suggests that people with poor credit because of too much debt might be more susceptible to bribes – turning them into a security risk.
Too much debt is the biggest problem for prospective employees applying for a sensitive job. Employers worry that a worker with a lot of debt will be more susceptible to bribery or more likely to steal and embezzle. Other financial red flags that may come up are bankruptcy, tax liens, defaulted loans, unpaid child support and judgments.
Sonya Smith-Valentine, attorney and president of Financially Fierce, is an expert on employer credit checks. She said research has not shown a direct correlation between bad credit and a bad employee, but this hiring practice may have some relevance in careers related to finance.
“Usually professions that include some type of fiduciary relationship like lawyers, real estate agents, financial planners, etc. will require you to have a handle on your finances to get licensed,” she said.
There are many industries that use employer credit checks before hiring. Here are some of the most common:
Before you enlist in the military, you have to go through a background check that will include financial information and a credit check. Those with too much debt or a history of bankruptcies may be disqualified. Many military jobs require a security clearance, and those with poor finances can be denied clearance.
Veteran Ryan Guina of The Military Wallet said the military will not clearly discharge someone for having a bankruptcy or poor credit, but they may demote that person or revoke their clearance. This can affect their ability to be promoted.
Even financial professionals have money problems – which sometimes can lead to career problems.
Both Certified Public Accountants (CPA) and Certified Financial Planners (CFP) will have any history of bankruptcy made public, although it won’t cause them to lose their license. Getting hired with a bankruptcy or other credit mistake may be more difficult, however.
Kate Dore, Certified Financial Planner candidate and money coach on Cashville Skyline, said it’s common for companies to check a planner’s credit score when applying for a job.
“Ultimately, it depends on the candidate and how much a company wants to hire them,” she said.
The Federal Bureau of Prisons will conduct a credit check for prospective employees. Like other government jobs, those who work in the prison system need to be trustworthy. Having significant debts could make them more susceptible to bribes, which is a legitimate concern in the prison industry.
Lawyers need a law license to practice, and that cannot be revoked because of credit problems or bankruptcy. However, a law firm may conduct an employer credit check and deny employment because of what they find.
Lawyers often have access to sensitive personal information. Many lawyers also work on an hourly basis, so a lawyer with money problems may be tempted to pad their hours to earn more money.
Most government and law enforcement agencies check credit histories for potential employees, including police officers. This is one profession that’s also commonly excluded from laws that limit employer credit checks. If you’re applying to be a cop or government worker, you should expect to have your credit report pulled.
According to the FBI, a bad credit history won’t automatically disqualify a candidate, but it depends on what the credit check reveals. Significant issues may lead to an applicant’s disqualification. The Border Patrol department website says that applicants need to disclose any “problems with bad credit.”
“Those who are deep in debt are more inclined to compromise national security with a bribe or other illegal act,” Smith-Valentine said.
Every casino has its own employment policy, but many will avoid hiring people with a poor financial history. Casino workers have access to money and sensitive account information, which could be tempting for someone with thousands in credit card debt.
According to the Massachusetts Casino Career Training Institute, “the financial stability, integrity and background of the applicant” will be considered during the hiring process.
Bad credit isn’t something you can ignore when applying for one of the jobs listed above. Facing the problem head-on may improve your chances of getting hired.
“If you have a good reason for your financial problems, it might make sense to mention it during the interview,” Smith-Valentine said. “You won’t get a chance to explain after they pull your credit report.”
If you got into debt taking care of an ailing parent or because of a long period of unemployment, these are mitigating factors worth mentioning. If it’s been several years since a bankruptcy or loan default, try to provide some proof that you’ve been making payments on time and avoiding further debt. For many employers, simply fixing your bad habits may be enough.
Start by checking your credit report to see where you stand, and if necessary, try to improve your credit before starting your job search.
Consumers don’t need to worry about their exact credit score, which the employer won’t see.
“It’s more important to keep your accounts current and keep negative information off your report than it is to worry about the actual credit score when it comes to employment prospects,” Smith-Valentine said.
There may be a significant number of companies and industries that care about the credit of their job applicants, but there are also plenty that don’t. Most entry-level jobs don’t require a credit report, and many states have laws on how employers can request and use credit checks to hire potential employees.
For example, New York City prohibits employer credit checks for the following workers: bank tellers, cashiers, salespeople, clerical workers, administrative staff, restaurant and bar workers and private security employees.
California’s state laws also have very strict rules on when employers can use credit checks for potential employees. In general, employees must be applying for a management position, a job with regular access to $10,000 or a law enforcement position.
If you’re worried about bad credit when applying for a job, research your state’s laws. Remember that less than one-third of employers conduct credit checks on employees, and this number may be even lower depending on the industry.
If there’s a bankruptcy on your credit report, it will eventually fall off. Chapter 13 bankruptcies are deleted seven years after filing, and Chapter 7 bankruptcies come off after 10 years.
The only way to improve your chances of getting hired is to fix the behavior that led to a bad credit report. Take particular care to make all your payments on time, as this is the most important factor in a credit report.
If you’re struggling to prioritize debt payments, contact your lenders and ask about what options are available to you. They may be able to reduce the payments and ease your cash flow situation. In some cases, like with federal student loans, borrowers may be able to defer loans because of economic hardship.
Unfortunately, people with no credit history are not immune from problems related to the job application process. Having no credit history doesn’t necessarily indicate that you’ll be a potential liability, but it doesn’t help your application either. In some cases, it could make you look unqualified for the responsibilities of the position you’re applying for.
“If the position involves access to money or client personal information, the employer may be reluctant to hire someone with no credit history,” Smith-Valentine said.
Zina Kumok is a Financial Health Counselor and Credit Counselor, certified by the National Association of Certified Credit Counselors, who writes extensively about personal finance.
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