While banks and credit card companies routinely check applicants’ credit reports, some employers do so as well. According to Bankrate, in 2004, over a third of all employers conducted credit checks before hiring. If you suffer from poor credit, it doesn’t have to cost you a dream job. You can make yourself appear more desirable to a potential employer by properly explaining your past credit mishaps.
Request your free annual credit reports from all three bureaus, Experian, Equifax and TransUnion, on the AnnualCreditReport.com website and identify any errors present that lower your credit score (see the Resources section). Formally dispute the errors with the credit bureaus.
Notify your potential employer of your damaged credit history as soon as you grant your permission to conduct a credit check. Own up to your mistakes or explain any errors on your reports and the actions that you’ve taken to correct them. Provide your potential employer with valid reasons for your poor credit reports, such as identity theft or financial circumstances beyond your control.
Write a formal letter of explanation outlining the reasons that you previously provided for your poor credit rating and send it to your employer. Explain how you’ve learned from your past mistakes and how your financial situation has improved. If the position you’re applying for has numerous applicants, this also helps your employer remember you and take your explanation into consideration when reviewing your credit files.
Provide your employer with evidence that you will make a good employee despite your damaged credit history. Letters of recommendation from previous employers or evidence of employment awards are ways in which you can demonstrate your value as an employee.
Tips
Pulling your credit before you begin your job search and disputing errors well ahead of time helps you fix your credit as much as possible prior to undergoing an employment credit check.
The Fair Credit Reporting Act requires potential employers to obtain your consent before conducting a credit check. If your credit is significantly damaged, you have the right to refuse consent – although doing so may endanger your job prospects.
If a potential employer turns you down for a job based on adverse information contained within your credit report, the employer must provide you with a copy of your credit report containing the adverse information and notify you that you also may request a free copy of your credit report from the credit bureaus.
References
- Bankrate: Don't let bad credit ... impact your job
- Privacy Rights Clearinghouse: Employment Background Checks: A Jobseeker's Guide
- Federal Trade Commission: The Fair Credit Reporting Act
- Experian. "What Is Credit?" Accessed July 2, 2020.
- Experian. "Does Your Income Appear on Your Credit Reports?" Accessed July 2, 2020.
- Experian. "What Are Credit Bureaus and How Do They Work?" Accessed July 2, 2020.
- Experian. "What Is a Credit Report?" Accessed July 2, 2020.
- Federal Trade Commission. "Free Credit Reports." Accessed July 2, 2020.
- Experian. "Will Your Score Go Down If You Check It?" Accessed July 2, 2020.
- Experian. "My Credit Score." Accessed July 2, 2020.
- Experian. "What Is a Good Credit Score?" Accessed July 2, 2020.
- Equifax. "How Can I Check Credit Scores?" Accessed July 2, 2020.
- TransUnion. "What Goes Into Your Home Insurance Score?" Accessed July 2, 2020.
- Experian. "Do Employers Check Credit Scores?" Accessed July 2, 2020.
- Federal Trade Commission. "Utility Services." Accessed July 2, 2020.
- Experian. "How to Get an Apartment With Bad Credit." Accessed July 2, 2020.
- National Consumer Law Center. "Past Imperfect: How Credit Scores and Other Analytics 'Bake In' and Perpetuate Past Discrimination." Accessed July 2, 2020.
Tips
- Pulling your credit before you begin your job search and disputing errors well ahead of time helps you fix your credit as much as possible prior to undergoing an employment credit check.
- The Fair Credit Reporting Act requires potential employers to obtain your consent before conducting a credit check. If your credit is significantly damaged, you have the right to refuse consent -- although doing so may endanger your job prospects.
- If a potential employer turns you down for a job based on adverse information contained within your credit report, the employer must provide you with a copy of your credit report containing the adverse information and notify you that you also may request a free copy of your credit report from the credit bureaus.
Writer Bio
Ciele Edwards holds a Bachelor of Arts in English and has been a consumer advocate and credit specialist for more than 10 years. She currently works in the real-estate industry as a consumer credit and debt specialist. Edwards has experience working with collections, liens, judgments, bankruptcies, loans and credit law.