You can pass a credit check for a job by disputing credit report errors, catching up on past-due bills, and proactively giving the employer context to help explain problem areas from your credit history. Having a credit card that reports positive information to the credit bureaus each month will help, too.
Employers are generally looking for candidates who are trustworthy. A strong credit history exhibits that quality. Conversely, poor credit may indicate that you are in financial duress, which could potentially lead to you committing fraud or theft.
- Check your credit report for errors – Errors can adversely affect your credit, so it’s important to regularly check your credit reports to confirm all the account details and entries are correct. If there are errors on your reports, you can file a dispute with the major credit bureaus directly. The bureaus typically respond to dispute claims within 30 to 45 days.
- Keep your accounts in good standing – Payment history is the most important factor affecting your credit. Paying your bills on time showcases your ability to use credit responsibly. If you are in the market for a new job, you should not skip any upcoming payments.
- Pay down balances to ensure your utilization is below 30% – Credit utilization compares the balance on your billing statement to the account’s spending limit, for each of your credit cards and other lines of credit. Keeping your utilization ratio under 30% protects your credit. If your credit cards or lines of credit are maxed out, it could be a sign you are facing financial hardship or you mismanaged your finances.
- Limit your credit card applications – Applying for a number of credit cards in a short time span can also suggest you’re facing financial difficulty. Ideally, you should wait at least six months to a year in between applications.
- Explain any issues on your report to your potential employer – If there are certain areas you know are weak spots, it may be best to offer an explanation before your potential employer reviews your credit report. You can provide context that may not be available otherwise.
You can check your credit report and get personalized credit-improvement tips for free here at WalletHub.
This answer was first published on 01/31/23. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
FAQs
Keep your accounts in good standing – Payment history is the most important factor affecting your credit. Paying your bills on time showcases your ability to use credit responsibly. If you are in the market for a new job, you should not skip any upcoming payments.
Can I be denied a job because of my credit? ›
The general rule in California is that an employer may not consider acquire or consider a person's credit report in making job decisions except for applicants for or employees in: managerial positions. positions with the state Department of Justice. law enforcement positions, including peace officers.
Will I get hired if I have bad credit? ›
Keep in mind that it is possible for your potential employer to deny you a job due to poor credit. This may be due to the fact that poor credit could pose a risk for fraudulent activities.
What is the minimum credit score for a job? ›
Employers don't get a credit score during this process, and thus there is no minimum credit score for employment.
Can a future employer Cannot check my credit report? ›
What are your legal rights as a job applicant? Thanks to the Fair Credit Reporting Act (FCRA), employers can't go checking your credit history behind your back. They must have written consent before pulling an applicant's credit history.
What credit score will prevent you from getting a job? ›
Know Your Rights
Before diving into employment and credit laws, let's dispel a myth that's been perpetuated online. When you hear things like “a bad credit score can prevent you from getting a job,” it's actually not true. That's because employers don't pull your actual credit scores like a lender might, says Griffin.
Do employers care if you have debt? ›
Even though your finances are very personal, your debt and credit could be important to your employer and it's accessible to them via background checks. Having a lot of debt might be viewed as a risk to them when they consider hiring you.
How do you explain bad credit to a job? ›
If you have a poor credit history, it's important to be upfront and honest with potential employers. Explain any extenuating circ*mstances that may have led to your financial difficulties and how you have taken steps to address them. This can show that you are responsible and proactive in addressing challenges.
Can a job fire you because of your credit score? ›
Most people know that employers can check your credit score while hiring you, but they can also do it while you work there—and let you go if the results are bad. If you were to make a list of things that would get you fired, where would you rank “having a bad credit score”?
Can a job offer be rescinded after a credit check? ›
If an employer conducts a credit check and finds a number of red flags, such as high levels of debt, bankruptcy, or a history of late payments, they may reconsider their decision to offer you the job. Although it may seem unfair, it's legal in many states for employers to take this action.
Ten states have laws restricting the use of credit reports for employment decisions, including the following:
- California – Cal. Labor Code § 1024.5 et seq.
- Oregon – Ore. Rev. ...
- Washington – Wash. Rev. ...
- Nevada – NRS § 613.570.
- Colorado – § 8-2-126, C.R.S.
- Illinois – 820 Ill. ...
- Vermont – Vermont Act No. ...
- Connecticut – Conn.
In these checks, employers cannot see the applicant's credit score but can see identifying information like their full name and address, credit accounts and available credit, payment history, the employment or work history that they have self-reported on credit applications, and their bankruptcies or liens.
Does a background check show debt? ›
Recent employment history* Verification of name, address, and social security number. A summary of active accounts and credit lines. Any debts incurred, including credit card debt, mortgage and car payments, and student loans.
Can an employer deny a job because of bad credit? ›
In the majority of states, employers can deny you employment if you have bad credit. Some states and cities have passed laws that prohibit the practice, though there are some exceptions, such as for jobs in the financial sector.
What is a soft credit check for employment? ›
A soft credit check is an inquiry into your credit report, initiated either by you or a company. A soft inquiry can occur even if you didn't apply for credit. It is primarily used to screen for preapproval offers or for a background check. Credit scores are not impacted by soft credit checks.
How to pass a credit check with bad credit? ›
Here are some things you can do:
- Offer Advanced Payments. Landlords are usually only concerned by bad credit scores, which could result in late payments. ...
- Get a Co-signer. ...
- Provide Strong Proof of Income. ...
- Offer a Good Explanation. ...
- Live With a Roommate. ...
- Get References From Past Landlords. ...
- Rent an Apartment Month-to-Month.
Banks and other financial institutions use credit scores to determine if you meet their criteria for a loan or a credit card. However, a credit score is used for more than financial matters; it may also be used to determine if you qualify for a job. It is possible to be denied a job because of bad credit.
Can your credit score affect your employment? ›
While credit scores are not generally used to make hiring decisions, employers can see and be influenced by your credit history, which would include closed and open lines of credit, any foreclosures, student loans and other aspects of your financial behavior.
Can an employer rescind a job offer because of bad credit? ›
If an employer conducts a credit check and finds a number of red flags, such as high levels of debt, bankruptcy, or a history of late payments, they may reconsider their decision to offer you the job. Although it may seem unfair, it's legal in many states for employers to take this action.
How to explain bad credit to potential employer? ›
If you have a poor credit history, it's important to be upfront and honest with potential employers. Explain any extenuating circ*mstances that may have led to your financial difficulties and how you have taken steps to address them. This can show that you are responsible and proactive in addressing challenges.
