No one knows the impact of bad credit more than Jewel Shaw. The 35-year-old single father recalls a job interview he went to in 2008: “I was asked back for a second interview. It seemed like I had the job. I later got a letter saying they chose someone else,â€ says the St. Louis resident. Shaw applied for a job at a bill collection agency. “My rÃ©sumÃ© proved I was qualified for the job. During the process I got to know the secretary who worked there. I said I didn’t get the job and she said, ‘How’s your credit?’ I said, ‘Not that good.’ I was in default on my student loan. She said that was the reason. The employer wanted employees to have good credit; they need to know they can trust their employees with their clients’ financial information.â€ Some good came out of this situation. Shaw says he was encouraged to pay off the student loan, get his credit in order, and regularly review his credit report. In the meantime, Shaw is working as a waiter.
“It’s not unusual to be denied a job because of your credit history,â€ says Robert Boyle, a founder and the CEO of Justine Petersen, a St. Louis-based company that assists low-income individuals and families with developing, maintaining, and increasing financial assets. “That’s one of the reasons we work with our clients, to show them how to establish a positive credit history,â€ adds Sheri Flanigan-Vazquez, chief operating officer of Justine Petersen, who notes that improving credit can directly affect one’s job prospects.
Here are four things to know about credit and your job:
Your future–and current–employer can check your credit report. If you’re being considered for a promotion, your employer can review your report to see how you manage money. Your promotion could depend partly on what’s in your credit report. Employment background checks often include one’s credit report, and more employers are using reports in their elimination process. This is especially true if you’re up for a job that requires you to work closely with money.
Employers can’t see your credit score. Employers receive a modified version of your credit report (known as an employment report) from the three major credit reporting agencies, which doesn’t include your score.
As your potential salary increases, more of your credit history is analyzed. If you’re being considered for a job that pays more than $75,000 annually, and the employer chooses to do a credit check, your entire credit history will be furnished to the employer–even financial mishaps that are more than seven years old. This includes negative credit information such as bankruptcies and tax liens. Criminal convictions can be reported indefinitely.
Financial services employees are under more scrutiny. Employers want to know if they can trust you with money. A poor credit history will make them uneasy, because it shows you’re unable to handle money properly. The reasoning is that if you can’t manage your own money, you certainly won’t be able to manage theirs.