How your credit score can hurt your job search

Job fair
Job seekers wait in line to enter the San Francisco Hire Event job fair on November 9, 2011 in San Francisco, Calif.
Justin Sullivan/Getty Images

If you're hit with an unexpected medical bill or a foreclosure, do you give much thought to the effect it might have on your next job?

You should.

Events like those can affect your credit rating, and credit ratings are one of the tools employers use to look into the backgrounds of job applicants.

You might expect rigorous background checks for job applicants in fields like national security or finance, and you might think it's reasonable for such checks to include a credit report. But those same background checks are in use for other jobs, too.

Shoe salesperson? Check. IT employee? Yes. Baker? Sure, why not?

According to Chi Chi Wu, attorney for the National Consumer Law Center, companies that offer background screenings for employers frequently check credit reports as part of their service. And given the general reluctance of previous employers to answer reference questions, prospective employers sometimes turn to credit reports as a means of judging a candidate's character.

Whenever a credit report is pulled during a background check, federal law mandates that the prospective employee receive notice and a copy of the report. According to a 2010 report by the Society for Human Resource Management, 13 percent of companies use credit reports on every job, and 47 percent use them on selected jobs.

In other words: The odds are better than even that, the next time you're up for a new job, someone will look at your credit history. And judging from the lack of popular knowledge about this practice, Wu thinks that most people aren't being told.

Wu joins us to talk about how your credit report could be hindering your job search. We also speak with Elisabeth Sanders-Park about other factors that might be hurting your chances of getting hired.


The Long Shadow of Bad Credit in a Job Search
"People tend to think of banks and other lenders as the main users of credit reports. But over the last several decades, credit reporting bureaus have been selling their services to a much wider range of buyers. 'Credit reports are really seeping into the soil,' said Sarah Ludwig, co-director of the Neighborhood Economic Development Advocacy Project, a New York-based nonprofit. 'It's taken an outsized role in employment, housing and insurance.'" (The New York Times)

10 Hiring Red Flags to Avoid
"In this economy, companies often are flooded with hundred of applications for a single opening. And so it's no surprise that hiring managers try to find ways to easily weed through the pile of resumes to get to the most qualified candidates to interview. It's easier for companies to dismiss candidates than to keep them in the running and complete the whole screening process with prospects who may not pan out." (

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