Credit Scores & Employment

Your credit score is an important number. Mortgage lenders rely on this three-digit number to determine if they'll give you a home loan and at what interest rate. Auto insurers use the number to help determine your car insurance rates. Credit card issuers use it to determine if you qualify for their cards. And, increasingly, employers consider these three-digit numbers when they're making hiring decisions.

How Credit Scores Work

Your credit score encapsulates how you've handled your finances in the past. If you have a history of making your car payments late or forgetting to pay your credit card bills entirely, then your score will be low. Your score will also be low if you run up large amounts of credit card debt. If, though, you always pay your bills on time and you don't have mountains of revolving debt -- and you've never filed for bankruptcy protection or lost a home to foreclosure -- the odds are good that your credit score is high. Most lenders prefer to work with consumers who have credit scores 720 or higher on the popular FICO credit-scoring system.

Employers and Credit Scores

A growing number of employers are checking the credit scores of job applicants when making hiring decisions. About 60 percent of employers in 2010 checked applicants' credit scores for some hiring decisions, according to a survey by the Society for Human Resource Management. This is up significantly from past years. A 2003 survey by the Society for Human Resources found that just 35 percent of employers were checking the credit scores of job applicants.

Why Employers Check Credit Scores

Employers say they check credit scores because high scores show that an applicant has made wise financial decisions in the past. For some jobs, this is important, employers say. For instance, applicants for an accounting job should be financially savvy enough to earn a high credit score. Critics, though, say that this process hurts people who truly need jobs. Those with low credit scores often get them because they don't have enough money to pay their bills. If employers deny them a job because their scores are low, then these people will still not have enough money to pay their bills.

Boost Your Credit Score

You can boost your credit scores so that you don't have to worry about whether a potential employer is checking your credit. To gradually but steadily increase your score, pay all your bills on time and cut down on your outstanding credit card debt. If you take these two steps, your credit score will improve. Don't expect instant results, though. Your score will take several months to improve.