How Your Finances May Influence Your Job Application

Specific sectors are more likely to conduct a credit check on applicants. This is the information you should know to increase your chances of being hired.

There’s a reason it’s referred to as personal finance because financial issues are unique. However, some employers, including society, make character judgments about how people manage their finances. This implies that your economic history could impact your job search, whether for good or bad.

An example A good credit history is often regarded as a sign of reliability, self-discipline, and intelligent decision-making. However, on the other hand, issues such as foreclosures, delinquencies or bankruptcies, and overdrawn credit lines could indicate poor judgment, reckless spending, or a failure to adhere to the obligations.

A study conducted by HR.com and the National Association of Professional Background Screeners, and HR.com discovered that 25 percent of HR professionals use financial or credit checks when applying for specific job positions. In comparison, 6 percent examine the credit score of all candidates.

Of course, the fact that somebody has a financial issue doesn’t mean that they’re bad people. However, fair or not, if you’re currently on the job search, the information in your credit report might be a factor that will affect or hinder your chances of getting hired.

Why is an employer concerned regarding my score on credit?

“What employers are taking into consideration and where they usually see a credit report is when you’re applying to an opportunity where you’re responsible for the company’s finances,” says Rod Griffin, the director of public education at Experian, among the three main credit bureaus. “They want to make sure that you’re handling your finances well.”

However, many other positions require financial or fiduciary duties that may require a credit report. There are different categories of employers that may want to review a candidate’s credit, says Laura Handrick, careers and workplace analyst for FitSmallBusiness.com, a digital resource for small businesses.

“For example, in the case of an organization that deals with expensive items such as jewelry, a strong credit report will show that the individual is financially secure and is, therefore, less likely be enticed to keep items in a safe place,” says Handrick.

In that regard, if you’re competing for law enforcement jobs or government agency jobs, or any position that will give access to other people’s confidential personal information, it is recommended that you undergo an assessment of your credit.

In some instances, the employer may not be as worried about your finances more than they are about checking for fraudulent applications. “They’ll make use of your credit report as a way to ensure that you’re the person you claim to be,” says Griffin. It’s possible to use it specifically for high-risk activities, such as government jobs or those that require a security clearance.

Although a credit score that isn’t stellar may not prevent your application for a job, however, this could become a decisive aspect. Consider this: If you have the option of two equally qualified candidates with perfect credit and the other who’s overextended and entrapped in debt, which one do you think the employer will select?

Know Your Rights

Before we dive into the laws governing credit and employment, Let’s dispel a myth repeated online. If you’ve heard that “a bad credit score can hinder you from getting an employment opportunity,” it’s not the case. This is because employers don’t check the actual credit scores as lenders do, according to Griffin. “[Employershave access to only a small portion of your credit report, and you’ll need to provide an explicit written authorization,” he says.

Here are the rules. The primary document that governs credit checks for employees is the Federal Fair Credit Reporting Act (FCRA). The following highlights are available:

Employers must notify the candidate that the credit verification may be used as a part of the hiring decision.

  • The employer has to obtain written consent to conduct the background/credit check.
  • The applicant must receive the notice, which contains a copy of the report used in making the decision, as well as an exemplification of “A Summary of Your Rights Under the Fair Credit Reporting Act.” The candidate should also be allowed to look over the report and to explain the negative information or challenge it.
  • Beyond federal law, there are currently 11 states that have restrictions on when employers can utilize credit scores in the selection process. Suppose you reside or are a California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington. In that case, it is advisable to investigate the law if you’re being asked questions about your credit score. The District of Columbia and cities like Chicago, New York City, and Philadelphia are also limited.

Some states allow credit checks for roles that grant confidential/proprietary information, security data, or trade secrets. In other situations, it is permitted if the job offers access to corporate expense accounts or cards.

Employers who conduct a credit check are unable to discriminate. This means that if they’re planning to perform a credit check on you, it is advisable to be checking everyone who applies for the job.

“Employers must be aware that if an employee later decides to sue for discrimination, it is on the employer to prove that there was no discrimination,” says Handrick. Employers should therefore have their policy written down and include the reason for the need to conduct a credit screening and apply the policy consistently, she adds.

Remember: According to law, employers must have your written approval before they conduct an assessment of your credit. This applies even if you’re in the process of being a candidate or when you’re offered a job in the future that requires approval for a credit check, according to Handrick.

Give Yourself an Acclaim

Based on the type of job or industry you’re applying to, the possibility is that your financial background will play a role in the hiring process. Thus, just as you’d revise your resume and enhance your social media profiles before the job hunt and you’re able to do so, it’s a good idea to spend time getting your finances in good order.

Review your clients’ credit reports, and you can review for free once a year with all three bureaus of credit: Experian, Equifax, and TransUnion. Additionally, look into whether one of your banks, credit card companies, or financial apps provides you with a credit score tool to provide more understanding (or you could pay a modest cost to obtain the scores).

When you do this before the screening of your credit by the hiring team, you’ll have the opportunity to correct any mistakes in your credit reports and identify concerns about the future employer. If, for instance, your credit report is delinquent, you may contact that creditor and ask what you can do to eliminate the delinquency from your credit report. If not, paying on time and keeping balances in check are the two most effective ways to keep your credit healthy.

If you’re not sure about your credit, make it clear to an employer you’re considering and explain the ways you’re transforming your situation.

You will be noticed (in an appropriate way)

If you’re concerned that your financial situation is slowing the process of finding a job, do not be worried. There are ways to get the interest of employers just by your strengths. Would you like some assistance in this regard? Join IPASS today for a free membership. If you are a member, you can post up to five copies of your resume, each customized to the type of jobs you are interested in. Recruiters browse IPASS each day, looking to fill the top positions with highly qualified applicants, precisely like you. In addition, you can receive notifications about jobs directly to your email inbox to reduce the time you spend perusing ads. Two quick and straightforward methods IPASS can assist you in getting on the right path to an exciting new job.

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