Credit Concerns and Your Job Search
By Joe Stein
A dangerous, combustible combination is occurring for many Job Seekers. The loss of employment coupled with a declining personal financial outlook has created a troublesome situation for Job Seekers. Job Seekers are facing the reality of both their existing debt and the sudden loss of income.
When it comes to post-offer testing, drug screening and criminal background checks have been around for awhile and have become almost standard for medium and large companies. What has become increasingly popular over the last few years has been the use of a credit check.
Read and review all the documents provided to you for your signature. You should be aware of all checks that will be done by the prospective employer. There are some items to know about a credit check. A prospective employer is bound by the Federal government to the Fair Credit Reporting Act. The report seen in an employment credit check is different than what a lender will see. Employers can view derogatory reports (i.e., late payments, bankruptcies, collections), but do not see any account numbers (identity theft safeguard) or your three digit credit score. If you are denied employment due to the information on the credit report, then you are allowed a free copy of the report used and can go through an appeal process.
Why Would a Credit Check Be Used?
· A Gauge of Moral and Ethical Standards – The theory here is that if you are in a difficult financial situation, you are more likely to accept an offer to do something improper. This is especially relevant if you are in a position where you will be handling money (bank teller, cashier and accountant) because you may be tempted to remove some. Someone in security, as another example, could be more inclined to be “bought off” and allow something to happen that should not. Finally, if you are in a position where you will be entering the home of a person (home health care provider, paramedic, and housekeeper), you may be credit checked for obvious reasons.
· Determine If There Is “More to the Story” – A credit report can sometimes reveal other nuggets of information beyond just credit. For example, if an employer views a number of past addresses, it may indicate an unstable past. Unpaid bills in collections may reveal information if it is, for example, from a medical company. This is an area where an employer may, unfortunately, stretch their own ethical and moral standards in the spirit of finding the best possible person.
· Estimate Productivity – This line of thinking is that someone with credit and financial concerns will be under more stress and therefore less productive than someone who is more secure.
· Sign of Irresponsibility – Most of us understand that a difficult credit situation can be created from a variety of challenging events, such as a medical situation or unemployment. For some, however, a weak credit situation is a sign of someone who is immature and lacks the ability to make decisions in a thoughtful manner.
· Risk Prevention – In today’s litigious society, an employer may want to “cover themselves” by running as many checks as possible. A company wants to cover all of their bases because if they are sued, they can prove that they took every reasonable precaution.
· Management Positions – In more senior management positions, credit checks are often part of the process. One reason is that there is a considerable investment in this level of position and a company would like to ensure they are hiring the right person. This level of position is also often bonus-eligible. A perspective employer would like to make sure that a person is not making decisions solely to increase their payout due to their personal financial situation.
Tips for Handling the Situation:
· Check Credit Prior to Search – Know what will be on your credit report. Everyone is entitled to a free annual report from one of the three major credit bureaus (Equifax, Experian, or TransUnion). Resolve any inaccuracies immediately.
· Be Careful Not to Further Damage – It may be very tempting to try to do everything necessary to reduce debt prior to the job search. Some activities, however, such as negotiating a partial payment payout with a credit card company, can actually harm your credit. A suggestion would be to do a little research and determine what you can do in your personal situation to improve your status.
· Communicate Ahead of Time – If there is something that you know will be found on the credit check, like a bankruptcy, you may want to communicate this information prior to the check. The thought is that being proactive and informing the Recruiter ahead of time will allow you to frame the situation and place it in its proper perspective. It will also prevent the Recruiter and Hiring Manager from feeling that you were hiding anything from them; instead, perhaps, they will appreciate your honesty.
· Consider Alternative Positions and Employers – In order to eliminate this as an issue, you can always just focus on companies that do not credit check, or positions where a credit check will not be performed, since it is not relevant.
A potential credit check adds one more dilemma to a job seeker during these difficult times. Understanding whether a prospective employer credit checks, what your history is, and what are your rights will allow you to address your situation properly.
As always, best of luck in your job search.