When applying to a job, it’s common to clean up your social media presence, get nice clothes for an interview, and read up on the industry where you’re applying. One area of preparation that often goes unaddressed, though, is your credit.
While it doesn’t happen in every scenario, some employers require a credit check before hiring you.
This means at times, no matter how shiny your Facebook profile is or how dapper you look in that interview suit, it’s the condition of your credit that can literally make or break your chances for employment.
Understanding Employment Credit Checks
If you find that you’re facing a potential credit check from your employer, it’s important to understand what that means in the first place.
An employment credit check is more than a glance at your credit score. It’s a review of your credit as a whole. In other words, if a potential employer feels that they need to check the credit of a candidate, they will review:
- Your personal information as it relates to your credit;
- Your credit card debt and management;
- Mortgages, car loans, student loans, and other personal loans;
- Payment history, late penalties, and other derogatory marks.
There are many restrictions, such as those created by the Fair Credit Reporting Act, that require employers to do things like get written permission and only use current information.
Nevertheless, it is within the rights of an employer to conduct a credit check.
Common Jobs with Employer Credit Checks
Many employment opportunities don’t require a credit check. However, with certain occupations, a quick check over your finances comes with the territory.
This includes areas of employment such as:
- Military jobs: These often come with extensive background checks which include a financial review and credit check.
- Financial jobs: It doesn’t matter if you’re trying to become a bank teller or a chief accounting officer, if you’re in finance, you need good finances.
- Government jobs: Law enforcement, prison workers, border patrol agents, and other government jobs often come with credit checks attached.
- Lawyers: If you want to be a lawyer, you may have to pass a credit check to be hired by a firm.
It’s also important to realize that once you’ve given permission, in many cases, your employer can circle back around and check again while you’re working for them.
If the results are bad, they can decide to terminate you.
While there are many common themes with employer credit checks, the restrictions can vary from one state, location, or company to the next.
Once hired, it’s wise to read through your company handbook to see what conditions are stated for potential resignation, discipline, or termination so that you’re aware of the risks.
Ways to Improve Your Credit
If you find that you’re in a field where you could have a credit check, it’s important to beat your potential or current employer to the punch. You can request a free copy of your credit report once a year from each of the three major credit bureaus.
It’s wise to do so and then review each report. As you do this, look for incorrect information or derogatory marks that might be hurting your credit. It’s also a good idea to check your credit score, too, to understand if you have good or bad credit.
If you find that your credit score is subpar or you have items of concern on your report, it’s important to make an effort to improve your credit before it affects your career. There are some ways to do this quickly, such as:
- Fixing errors on your credit report by sending a dispute letter to the credit bureau.
- Resolving derogatory marks, such as a delinquent account, on your credit report and then sending a forgiveness letter to the lender asking them to remove the mark.
- Requesting a credit limit increase to reduce your credit utilization ratio.
The above activities can help boost your score a bit in the short term. However, it’s also important to establish healthy long-term financial habits, as well, to ensure that your score continues to rise and stay in the good credit range. Here are a few suggestions to help do so:
- Set up auto-pay, create reminders, and make every payment on time with no exceptions.
- Pay down your non-revolving debt, such as personal loans or a mortgage.
- Continue using and fully paying off your revolving credit, such as your credit cards.
If you can take steps to responsibly manage your credit now, it can pave the way for your future employment.
Helping Your Credit Positively Affect Your Career
Your credit can have a serious impact on your career. Past financial troubles can bar you from certain lines of employment. At the same time, having good credit can stand as a testament to your financial abilities.
So review your credit history and consider if it is helping or hindering your professional activities. If it is good, keep on doing what you’re already doing. If your credit is bad, though, start taking steps to fix it today.
Dan Matthews is a freelance writer with a penchant for financial wisdom and solid research. You can find him on Twitter @danielmatthews0 and LinkedIn.
Josh founded Money Buffalo in 2015 to help people get out of debt and make smart financial decisions. He is currently a full-time personal finance writer with work featured in Forbes Advisor, Fox Business, and Credible.