Credit Rating & Employment

Job seekers who have poor credit histories may have a hard time finding employment as companies use credit checks to weed out job applicants. A potential employer is supposed to tell applicants if their credit histories prevented them from being hired. Job seekers have little recourse if they're rejected due to negative credit histories, but they can dispute negative credit information if it's incorrect.

Credit Checks

A 2010 MSNBC article titled "Bad Credit Sidelines Some Jobless Workers" notes that a survey by the Society of Human Resource Management found 60 percent of 350 employers who responded to the survey check credit histories for some or all of their job applicants. Employers' inability to rely on applicants' references may be one reason companies are doing credit checks. The MSNBC article says employers avoid giving bad references because they're concerned they might be sued by former employees. Therefore, credit histories may be used as a measure of people's character. It's assumed that applicants who manage their credit well will be better employees.

Employee Theft

The value of checking people's credit to determine whether they'll be good employees is in dispute. According to a 2010 "New York Times" article titled "As a Hiring Filter, Credit Checks Draw Questions," researchers indicate there's no evidence that job applicants with poor credit ratings make unsuitable employees or that they steal from their workplace due to financial troubles. Still, employers' concerns about personnel thefts are valid. The "New York Times" says retailers link $30 billion in annual losses to employee thefts.

Background Checks

Certain occupations draw more credit checks than others. Finance executives, bank tellers, cashiers, jewelers and other people who handle cash and valuables are likely to be subjected to credit checks by employers. Nonetheless, MSN Money's "How Bad Credit Can Cost You a Job" indicates some employment-industry professionals say job seekers shouldn't be overly concerned about credit checks because employers are often more focused on background checks. They use background checks to verify people's identities and to determine if job applicants have a criminal history.

Fair Credit Reporting Act

The U.S. Fair Credit Reporting Act requires employers to get job applicants' written permission for credit and background checks. Therefore, job seekers can refuse to give their permission. People who don't want potential employers to do credit and background checks should pay close attention to what they're signing when they fill out a job application. The small print at the bottom of some applications grants an employer permission to do those checks, and you may unwittingly go along with the practice if you sign an application without reading all of the details .