I recently interviewed a number of people about unique job search tactics they used that resulted in an offer — everything from attention-getting mailers to extreme networking techniques. But one area that can trip up the creative job seeker is a poor credit history.
Companies are increasingly using credit reports as a method of vetting candidates, according to CreditCards.com, the informational and card search Web site. "Some companies think that checking a person’s credit is more reliable than a reference," says Ben Woolsey, director of marketing and consumer research. "Good credit can indicate a level of responsibility that's desirable in employees. It can also give employers an idea of whether they can trust an employee around money."
Fortunately, not all credit blemishes are judged equally. Nearly two-thirds of firms surveyed by the Society of Human Resource Managers said outstanding judgments such as lawsuits filed in court were most likely to affect their hiring decisions. Next in line were accounts in debt collection, with about half of respondents saying such accounts would weigh negatively on a candidate's job prospects. Nearly one in five said a high debt-to-income ratio would impact their hiring decision negatively, and one in ten said a foreclosure would keep them from hiring an employee. Just 1 percent would look negatively upon medical debt.
A credit check usually happens after a first interview. While potential employers can legally perform credit checks under the Fair Credit Reporting Act, they can't proceed without your permission. But refusing such a check is likely to be a deal-breaker.
If you've got bad credit, be sure to have an explanation ready. If your credit was damaged due to personal reasons and not irresponsible behavior, it may not weigh as heavily on your job prospects. For example, if you got into debt putting yourself through college, emphasize the fact that you took full responsibility for your education. If you shoe-shopped your way into the red, be prepared to discuss the strategy you have in place to improve your credit, such as paying all of your bills on time and paying more than the minimum on your credit cards.
If you've made it successfully through a first interview and have a skeleton in your credit closet — such as a recent bankruptcy — you may want to disclose it before the hiring manager discovers it on his own. (Meanwhile, here are some tips to boost your score.)
Have you ever been tripped up in a job search by bad credit? How did you overcome the challenge?