Finding a job in today’s current market can be tough. Most job seekers know that they need an awesome resume and a well-crafted cover letter. What few of them consider is their credit report and how it might impact their job offers. Many employers conduct credit checks for their job candidates. A bad credit report can keep you from landing that dream job you’re eyeing.
Before you begin your job search, take the time to learn check your credit report and educate yourself about what’s in it. There are several online sites available – but watch out; not all of them are reputable! I recommend AnnualCreditReport.com. The website entitles you to a free copy of your credit report from all three credit reporting agencies. You want to check the report for errors or erroneous information. If there are any, address and dispute the information with the agency reporting it.
Once completed, you want to check the reports for items employers may see as red flags and be prepared to talk about them. There are three areas you need to review.
First, if your revolving credit total (credit cards) is higher than 30% (amount owed versus limit) in total, then you are considered to have a high credit balances. The potential employer might think that you are “over your head” in credit card debt and can’t stick to a budget. Calculate what it will take for you to get the total amount owed on credit card debt under 30%, then make a plan and follow it.
Second, look at how often you are requesting new credit. If you apply for multiple credit cards during a short period of time, you will reduce your credit score by as much as three points per inquiry. This can drastically reduce your score, and it sends the message to potential employers that you are desperate for access to extra cash.
Third, if you have significant delinquent debt, bankruptcies or foreclosures, your potential employer will be concerned whether or not your salary will cover your obligations. Even though they are not supposed to discriminate against you, they might see this as an indicator of how well you manage your finances.
The main thing to do is once you correct any erroneous errors on your credit report is develop a plan to start prioritizing paying off your current debt. Make sure you are prepared to talk about your credit report with your potential employer about why the report looks the way it does and what your plans are to improve it. If you have legitimate reasons (i.e., divorce or illness) then the employer might be sympathetic to your situation. But first and foremost, be proactive and honest.