After the financial crisis in 2008 precipitated large scale unemployment, employers began to use credit card scores to filter out the large number of people applying for limited positions. Unfortunately, what this means is that if you have a bad credit score, it can prevent you from climbing out of debt and getting back on your feet. In other words, a bad situation can get worse.
It’s not uncommon for a company offering a job to screen applicant’s backgrounds. This screening process includes checking criminal history and credit history. Additionally, credit history may also be used to decide on promotions.
A bad credit history can prevent you from getting job or prevent you from moving up in a company regardless of how well you’ve done your job. These credit histories can be as revealing as x-rays. Your personal history is no longer personal.
Currently, only eight states prevent employers from using credit history in this way:
- California
- Connecticut
- Hawaii
- Illinois
- Maryland
- Oregon
- Vermont
- Washington
If you don’t happen to live in one of these eight states that have strict laws on employment discrimination, your only defense against an invasive scrutiny of your past is to refuse permission. This, however, is self-defeating since it means that you are unlikely to get the job.
Your only possible reprieve is that federal discrimination law prevents credit card checks when the advertised position does not call for any cash handling work. However, this makes it difficult to get a good position because most executive positions require some interaction with company revenue or expenses and even sales clerks have to count the register at the end of the day.
What Shows Up On a Credit History?
Employers like to use credit cards to screen out job applicants or candidates for promotion because credit history can be very revealing.
Here is a brief list of what shows up on a credit card:
- Delinquencies
- Bankruptcies
- Judgments
- Liens
- Loans
- Mortgages
- Credit-card accounts
However, many of the items listed may not even be accurate. Perhaps, you purchased an expensive item, fell behind in the payment, but then eventually paid for it in full. However, the credit report may only show that you fell behind in payment and was not updated to indicate that the debt was completely satisfied.
Fixing the Mess
How do you get a job that you are fully qualified or get a promotion that you deserve if you have made some poor decisions in the past that are now clearly spelled out in excruciating detail on a credit card report? You have three choices. One option is to get a copy of your credit report and ask the creditor to clear up any errors and then file a report with the three credit agencies. However, this is slow, long-drawn out process because the creditor may not respond quickly. A second option is to hire a financial consultant to help clean up all errors on your behalf. Since the work is handled by experts with industry-wide connections, it gets done fast. Finally, the last option is to wait 7 years for your history to be erased, but this is not much of a choice if you need a job right away.
Today’s post is written by Kevin, an account director at for a boutique investment firm and has been working within finance, marketing and public relations for over 8 years.
