{"id":3049,"date":"2013-06-07T04:00:26","date_gmt":"2013-06-07T08:00:26","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=3049"},"modified":"2013-06-04T02:09:43","modified_gmt":"2013-06-04T06:09:43","slug":"has-your-credit-report-cost-you-a-job","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=3049","title":{"rendered":"Has Your Credit Report Cost You A Job?"},"content":{"rendered":"

\"forbes\"<\/a>The job market has been tough for older workers, but did you ever imagine that you wouldn\u2019t land a job because of your credit report?<\/p>\n

It\u2019s possible.<\/p>\n

As I wrote about in my Forbes blog, Bad Credit Can Cost You a Job<\/a>, if you\u2019re looking to change careers, find a new job, get promoted, or just hang onto the one you have, a messy credit report can trip you up.<\/p>\n

Employer credit checks are preventing the nation\u2019s hardest hit job seekers from entering the workforce, a new study shows.<\/strong><\/p>\n

One in four unemployed Americans have been required to go through a credit check when applying for a job, and one in ten have been denied jobs due to information in their credit report, according to a\u00a0survey<\/a>\u00a0by think-tank Demos of about 1,000 low- and middle-income households with credit card debt.<\/p>\n

Six out of ten private employers check the credit histories of at least some of their job applicants, and 13 percent conduct them on all candidates, according to a survey by the Society for Human Resource Management.<\/p>\n

Why? Presumably to prevent theft or embezzlement, fear of lawsuits for a hiring mistake if their employees do something wrong, or to get a sense of the overall dependability of a job candidate. They\u2019re also used to screen applicants for positions that carry financial responsibilities.<\/p>\n

In general, employers conduct these checks for job seekers applying for positions with financial responsibility, for senior executive positions, and for those positions with access to highly confidential employee information, according to the report.<\/p>\n

This trend spans across all industries\u2014they\u2019re not exclusive to financial institutions.<\/p>\n

Is this fair? Should employers judge your ability to perform in a job by your bill-paying performance?<\/p>\n

\u201cEmployer credit checks are common and they\u2019re keeping people from getting jobs,\u201d according to Amy Traub, Demos senior policy analyst and author of the report.<\/p>\n

(More: Check out this\u00a0HuffPost Live<\/a>\u00a0discussion on the Demos study.\u00a0I was an expert guest, along with John Ulzheimer<\/a>, credit expert at Creditsesame.com<\/a>)<\/strong><\/p>\n

Bad credit often is a fallout of unemployment and the loss of health insurance, Demos found. Another common cause of poor credit\u2013 medical debt.<\/p>\n

Demos\u2019 survey also cited errors on credit reports as dinging job applicants\u2019 credit.<\/p>\n

As Richard Eisenberg reports in this Next Avenue blog<\/a>, a government study finds credit bureau mistakes are rampant.<\/p>\n

That\u2019s something you can control. I\u2019ll explain what you can do below.<\/p>\n

In truth, the majority of employers say that a credit check is not the most important factor in a hiring decision, previous work experience is, according to SHRM.<\/p>\n

I \u00a0get why employers would use this tool as part of their due diligence when vetting future employees.<\/p>\n

It can be troublesome, however, particularly when someone has been knocked down by a lost job or medical crisis, but it\u2019s a reality in our digital world.<\/p>\n

Don\u2019t play the victim.<\/strong><\/p>\n

First, by law, employers aren\u2019t allowed to run a credit check without your permission. And they have to tell you if you lost out on the job because of your credit history.<\/p>\n

Importantly, they must give you the opportunity to explain the black marks, or dispute the incorrect information if there happens to be something.<\/p>\n

That said, in my opinion, most employers aren\u2019t going to tell you that it\u2019s your credit that killed your chances and risk opening up that can of worms.<\/p>\n

My guess is they are more than likely to say they changed directions in what they were looking for in a candidate for the position, or a fairly general and oblique explanation why you were passed over.<\/p>\n

Here\u2019s my proactive advice.<\/p>\n

1. Get there first.<\/strong> Pull your report before an employer does and clean up any errors.<\/p>\n

2. Check for mistakes on your credit report annually.<\/strong> Visit www.annualcreditreport.com t<\/a>o request a free credit report from the three major consumer credit reporting agencies\u2013Experian, Equifax and TransUnion. Fixing mistakes can take a little time, so if you are eyeing that next job, a second verse, get going.\u00a0You can also check your credit score and report card for free with Credit.com<\/a>.<\/p>\n

3. Prepare an explanation.<\/strong> If you find negative information on your report that is<\/em> correct, plan what you\u2019re going to tell a potential employer. At least you won\u2019t be blind-sided by it and will have a chance to make your case.<\/p>\n

On the brighter side, there was some good news in the credit report world this week.<\/strong> VantageScore<\/a> Solutions, which is owned by the three major credit bureaus (Experian, Equifax and Transunion), announced the latest version of its credit scoring model.<\/p>\n

It omits negative credit information that happened as a result of a natural disaster. And importantly, collection accounts that have been settled or paid off will not be included in the score. Many consumers are unaware that currently, paying off a collection does not necessarily rehabilitate a credit score, writes Michael Schreiber, Credit.com Editor in Chief, wrote in this blog.<\/a><\/p>\n

Other scoring models, including the market-leading FICO score and previous VantageScore models, treat collection accounts \u2014 even those that have been paid off \u2014 as predictive of a consumer\u2019s likelihood to pay off future debts.<\/p>\n

My parting question to you: \u00a0Have you been turned down for a new job because of your credit report?<\/p>\n

\"Kerry <\/a><\/p>\n

Kerry Hannon<\/a>, Contributor<\/p>\n

I cover boomer careers, retirement, aging and personal finance.<\/p>\n

Follow me on Twitter,\u00a0@KerryHannon<\/a>\u00a0I\u2019m\u00a0the author of\u00a0Great Jobs for Everyone 50+: Finding Work That Keeps You Happy and Healthy \u2026 And Pays the Bills<\/a>\u00a0(John Wiley & Sons<\/a>), available here\u00a0www.kerryhannon.com<\/a>. Check out my\u00a0column\u00a0<\/a>at\u00a0AARP. My weekly column \u00a0at\u00a0PBS\u2019s<\/a>\u00a0NextAvenue.org is\u00a0here<\/a>.<\/p>\n