Job hunter Lauryn Beer has experience, she has skills, and she has advanced degrees from prestigious universities – but she also has not-so-great credit, and she says it is costing her job opportunities.
"It makes me very angry," Lauryn said. She is learning the hard way that employees care about your credit. Some even require credit checks as part of the application process. But not everyone agrees with the policy.
A new survey by credit.com reveals that more than half of Americans – 53% - are against employers getting a look at your credit when considering you for a job.
"There are millions of people out of work, suffering and depression are on the rise,” Lauyrn said. “Why in God's name are we putting another impediment in the way of job seekers?"
This issue is getting national attention. There’s a bill in congress which would prohibit the use of credit checks when it comes to making a hiring decision, with a few exceptions. That includes people applying for a national security position or a job where they’d handle large amounts of money.
Representative Steve Cohen proposed the legislation, saying that credit checks are creating a vicious cycle that’s impossible to get out of.
"You don't have a job, you lose your house, you have your medical debt and before you know it your credit rating is gone in no time,” Cohen said. “People who want a job are being denied through no fault of their own."
The real question – does bad credit equal bad employee? Studies are mixed.
Still, James Ratley with the National Association of Certified Fraud Examiners sees a need for credit checks to protect companies. He says the association’s research shows the wrong employees can be devastating to an organization.
"When someone is having financial difficulties themselves they are much more inclined to take money that does not belong to them,” Ratley said. “Employee credit checks for potential employees are a vital part of the hiring process."
That said, everyone agrees that bad credit is becoming more common in this economy, and could be caused by a number of things that may not be in your control – from the death of a spouse to identity theft – or even mistakes on your credit report. And if that’s the case, be prepared to explain it.
"I think people need to know up front that if an employer may look at their credit records and if there's something in there they're concerned about they may even want to consider raising that during the interview," Ruth Susswein of Consumer Action said.
Keep in mind that the employer can not see your credit report without your permission. You have to authorize that. But deny them, and your application may not make it to the next step.
So what can you do to still get that job?
Credit experts say that before you start applying, be proactive.
Request your credit reports and fix any errors. Because if you’re not prepared, credit.com’s Adam Levin says, "It could end up costing you a job."
It’s important to note the employer would get a different kind of credit report than the one that includes your actual score. The employment report includes your credit payment history and other credit habits.
There are also bills pending in more than 20 states across the country and four states have already restricted the practice. U.S.
Residents are allowed to get a free copy of their credit report each year. See our website for information on how to request yours.
