Can You Be Denied a Job Because of Bad Credit?
Credit scores can affect your ability to get a loan, rent or buy a house or car, or getting approved for credit cards. Did you know that having a poor credit score can affect your chances of getting a job? Almost every state allows employers to deny you a job because of bad credit. Some experts have found that there is a 1:7 chance of being denied employment because of a poor credit report.
What is a Credit Score?
Your credit score looks at your debt, amount of debt, history of debt, and your repayment history. Financial institutions can use your credit score to determine whether or not you are a good risk to lend money to. The idea is that the better your credit score the lower the risk that you will be to pay back your loan. Employers can also look at your credit score and use your history to determine whether you are a good employment risk.
Can Employers Check Your Credit?
The answer depends on which state you live in. Only California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington ban credit history discrimination in most cases. Even in these states, there are exceptions for financial institutions and similar occupations. Not all employers will want a credit history for all potential employees and a credit history might not be required for a non-salaried, entry level position.
The company will not receive a complete history including marital status, age, or account numbers. They will only see a record of payment history, debt amount, and available lines of credit.
Before checking your credit, a prospective employer is legally required under the Fair Credit Reporting Act to let you know that they are checking your credit history and they must get written permission to do so. You can refuse the credit check, but you may also be turned down for the job.
If you are denied a job due to bad credit, the prospective employer should send you a “pre-adverse action notice” and a copy of your credit history to let you know they are planning to reject your application due to your credit history. The company must wait three to five days before finalizing your rejection. You can take this opportunity to speak with the employer to explain your credit history. If they proceed with the rejection, you should receive a “post-adverse action notice” that contains the name and contact information of the credit reporting agency and the right to request a full copy of your credit report within 60 days.
Why Do Employers Check Your Credit?
Employers believe that your credit score indicates your level of responsibility and trustworthiness. If you are consistently late making payments, the employer may assume that you will not consistently meet deadlines or obligations. A lot of debt could indicate you may be in financial difficulties and may commit fraud or steal from the company. Finally, if you manage your finances badly, you may also mismanage company funds or sensitive information.
Can You Get a Security Clearance With Bad Credit?
Having bad credit can make it harder to get a security clearance. Depending on the state, jobs in finance, government, law enforcement, information technology, and those with trade secrets generally require a credit check. If your job allows access to prescription drugs, pharmaceuticals, or other assets, you will probably be required to allow a credit report.
Does a Pre-Employment Credit Report Hurt My Credit Report?
Generally, only “hard pull” credit report requests will temporarily decrease your credit rating. “Soft pull” credit reports do not harm your credit score. Since pre-employment credit reports are considered soft, your credit score should not be affected.
Can You Get a Job with Bad Credit?
The short answer is yes, but it depends on the type of job that you are applying for. If your credit is less than stellar, there are some steps you can take to improve your score as you look for a job.
- Get a free copy of your report from Equifax, TransUnion and Experian. You can get a free copy once a year.
- Inspect your report for any errors or inaccuracies. Correct any in writing through certified mail.
- Pay bills in full on-time, every time. This has a huge effect on your credit score!
- Pay down loans as much as possible.
- Avoid increasing debt by taking out another loan or credit card.
- Be upfront if your potential employer requires a credit history. Explain why it will be less than good and what you are doing to solve it.
If you have too much debt and can’t make even monthly payments, you may need more help from a company that specializes in credit counseling, or debt settlement. Pacific Debt, Inc can help you find a solution to your debt.
Pacific Debt, Inc
Pacific Debt Inc is one of the leading debt settlement companies in the US. We help you understand all your options and whether or not debt settlement is the best option. If it is not, we will refer you to a trusted partner who may be more appropriate for your unique financial situation.
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We can provide our customers an enrollment letter that states you are actively enrolled into our debt relief program and currently taking measures to work on paying off your debt. The enrollment letter will include your payment history with our company letterhead.
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Pacific Debt is currently providing debt relief coverage in the following states:
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For more information, contact one of our debt specialists today. The initial consultation is free, and our debt experts will explain to you all your options.