Bad Credit and Background Checks

By Debra Wheatman

You know that job searching, particularly when unemployed, can be a long, slow, painful process. Imagine that you've been out of work for more than a year, and you've finally received a verbal offer, which is contingent upon the successful completion of a background check. You start to're worried because your once-stellar credit has been tarnished by your protracted period of unemployment. Will they pull the offer when they see that you've missed a few payments?

The short answer is, probably not. In fact, the chance that you would be subject to a credit check for a position that does not involve handling cash or having fiduciary responsibility is unlikely. Here are a few things you need to know about pre-employment credit checks:

Most employers do not pull credit reports on all applicants. According to the Society of Human Resource Management (SHRM), only 13% of employers check credit on every potential hire.

They are almost always conducted for retail or positions that involve executive-level oversight of company finances. The purported reason for this is the assumption that if you have bad credit, you will be more likely to steal from the employer's till. This, of course, is nonsense. Bad credit does not make someone dishonest, just as good credit doesn't mean that you are beyond reproach. Bernie Madoff? He probably had really good personal credit prior to his arrest and conviction.

They are only pulled after a decision to hire has been made. The credit check is one of the last things in the pre-employment process. That means that if your credit has a few dings on it, you are still in a good position because you are the candidate they've determined that will fit best with their team!

Poor credit does not immediately disqualify you. Any reasonable person who has been conscious for the last decade understands that someone's financial situation can change in a (relative) instant. If the financial and housing crisis of 2008 taught us anything, it's that no amount of "good judgment" or "proper planning" can shield people from something catastrophic over which they have no control.

They could be looking at the credit report to verify non-credit information. Your credit report contains information such as previous addresses, other names you've used, and previous employers.

Only a few jurisdictions limit the use of pre-employment credit checks. In most of the U.S., a pre-employment credit check is perfectly legal. Jurisdictions which have restricted the use of credit histories are California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington.

When you apply for a position, chances are that you signed a consent for a background check. Should you get to the point of offer and are advised that there will be a credit check run, come clean. If your credit history is dinged, be upfront and explain why. Reasonable people understand that it's easy to rack up tens of thousands of dollars in medical bills from a single motor vehicle accident. They also understand that if you've been out of work for an extended period of time, your credit is likely to suffer. Fortunately, most people are reasonable. Lastly, make it a habit to pull your credit report yearly, and to scour it for discrepancies. The only one who is going to advocate on your behalf is you!

About the author:

Debra Wheatman, CPRW, CPCC is the founder and owner of Careers Done Write a professional branding and marketing company. Debra's company provides full-service career consulting and writing services to help clients stand out in a hyper-competitive environment to secure interviews and ultimately offers of full-time employment. She may be reached directly via her site at Follow Debra's social media Facebook, Twitter, and LinkedIn.