Finances: Could bad credit cost you a job?

Having lost his job as an inventory manager last year, Juan Ochoa was “delighted” when a staffing firm contacted him about a data-entry opening, said Jonathan Glater in The New York Times. But delight soon turned to despair for the Santa Ana, Calif., 46-year-old: The firm checked his credit history and saw too many collections claims. “Once reserved for government jobs or payroll positions that could involve significant sums of money, credit checks are now fast, cheap, and used for all manner of work.” Employers argue that credit histories are a “valuable tool” for judging reliability, and these days they can afford to be picky. “You don’t want that decision-making overflowing into your organization,” says Anita Orozco, director of human resources at petrochemical company Sonneborn.

For unemployed workers facing mounting bills, such credit checks create a “cycle of pure misery,” said Liz Wolgemuth in U.S. News & World Report. “You need a job to improve your financial situation, but your finances are now hurting your ability to get a job.” A House bill, introduced in July, aims to prohibit most employers from scrutinizing applicants’ credit reports; exceptions would be made for jobs with financial firms and government agencies, and those requiring a security clearance. In the meantime, there are a few “safeguards” job seekers can fall back on. Employers that do a credit check must notify applicants, and give them a copy of the report and a chance to dispute it. But why leave things to chance? “Get a head start on your credit history so that it’s cleaned up as much as possible by the time a company may want to look at it.”

There’s only one way to do that, said Karin Price Mueller in the Newark, N.J., Star-Ledger. Stop making late payments and start paying down outstanding debt. Though a reduction in income can make it hard to pay bills on time, most creditors are willing to listen to explanations, says Michael Gibney of Highland Financial Advisors. As soon as you see yourself slipping behind, explain your situation and ask to set up a payment plan. “You want to contact them and have this worked out before they contact the credit agencies to report you as delinquent,” Gibney says.

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