Is Your Credit Rating Costing You Jobs?

How is your credit rating?  Are you planning to improve on it once you you get a stable job?  This may not be possible, because your credit rating could be standing in the way of you getting hired.

Many employers perform a credit check during the applicant screening process.  If your credit rating is poor, your application may be removed from consideration.

“A 2009 survey by the Society for Human Resource Management – which represents HR professionals in more than 140 countries – found 47 per cent of companies ran credit checks for certain positions while 13 per cent did this type of screening for all jobs.” http://www.theglobeandmail.com/report-on-business/small-business/sb-managing/human-resources/do-credit-checks-really-prove-your-job-worthiness/article1917726/

Employers sometimes use credit checks for jobs where the employees will be accessing large sums of money.  Credit checks are also used to assess judgment. “If you see a history of bad decision-making, you don’t want that decision-making overflowing into your organization,”said Anita Orozco, director of human resources at Sonneborn, a petrochemical company based in Mahwah, N.J.   http://www.nytimes.com/2009/08/07/business/07credit.html

Some employers also believe that employees who have credit issues may be more tempted to steal from the company.  “Theft and fraud prevention was cited by 54 per cent as the main reason for checking job applicants’ credit history. The second most common reason was to reduce the company’s legal liability for negligent hiring, while the third reason, cited by 12 per cent of respondents, was to assess a job candidate’s trustworthiness.”
http://www.theglobeandmail.com/report-on-business/small-business/sb-managing/human-resources/do-credit-checks-really-prove-your-job-worthiness/article1917726/

Not all employers perform credit checks on applicants.  It is a controversial practice, particularly when there is no clear relationship between the applicant’s credit rating and their suitability for the position.  This practice is far less prevalent in Canada than it is in the United States.

If you do have a poor credit rating, there are some actions that you can take.  Here are some tips from the Office of Consumers Affairs, at Industry Canada:

  • Pay your bills on time.  Some companies report late payments.
  • Pay off your debts as quickly as possible.
  • Try to pay bills in full by the due date.  If this is not possible, at least pay the minimum balance specified on the statement.
  • Don’t go over the credit limit on your credit card.  Try to keep the balance low.
  • Reduce the number of credit applications that you make.  If too many potential lenders ask about your credit within a short period of time, it could negatively impact your credit rating.
  • Check your own credit report to make sure that there are no errors that are negatively impacting your credit rating.  Your score does not change when you ask for information about your own credit report.
  • Make sure that you have a credit history.  If there is no record of you borrowing money and paying it back, you will have a low credit score.
  • If you are thinking about hiring someone to repair your credit, first consult the Office of Consumers Affair’s website to ensure that you have all of the information that you need.               http://www.ic.gc.ca/eic/site/oca-bc.nsf/eng/ca02178.html

Your credit rating follows you everywhere, so it is important that you do everything that you can to keep it strong.  If you are vigilant, pay your bills on time, and keep your debt to a minimum, your credit rating should never be a problem.

(Photo From: Naypong / FreeDigitalPhotos.net)

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