Tight times can blemish credit reports. How do background checks affect hiring decisions?
Worried that recent economic travails have blemished your credit report? That those mortgage payments that went out a few days late might catch up with you? Or the cable bill you let slide for an entire month might come up in a background check and keep you from landing the job you really want?
Take heart: Your credit score is rarely used to disqualify job seekers for most positions, and there are steps you can take to minimize any damage an employer might find, recruiters and credit experts told Ladders. To protect yourself, it’s helpful to know what your credit report can and cannot tell potential employees about you.
Many hiring companies use credit reports to glean the most accurate identifying details for a candidate, including his full name and previous addresses. In general, though, research rarely goes further, said Kevin Connell, founder and CEO of AccuScreen, a firm that performs pre-employment screenings for hiring companies in retail, healthcare, technology and banking.
One exception: Most companies will run a full credit report on any candidate who would have access to the company’s finances. “For candidates that would have financial oversight responsibilities, credit checks are even more important,” Connell said. A consistent pattern of living beyond your means and/or a high debt ratio could be a red flag to recruiters and employers that you’re not the right fit.
In addition, a complete credit report becomes more common for the C-level executives, said Jill Knittel, principle of ER Associates, an executive-search firm based in Rochester, N.Y. At least half of her clients request a credit report at the C-level, she said.
“Clients want to have the foresight into someone’s financial mind,” Knittel said. “Seeing how [you] run the ‘business of life’ can identify and mitigate employers’ risk for embezzlement and/or fraud.”
In these cases, most companies will also ask for two to three years of tax returns to demonstrate a candidate’s income and ability to live within their means.
But given the current economic climate, the duration of unemployment faced by many and the state of credit markets,, most employers have grown more accepting of blemishes on a candidate’s credit, Connell said. They know that otherwise solid, even exemplary, candidates could fall victim to layoffs, missed bill and mortgage payments and even bankruptcy, resulting in a poor credit score. “In my opinion, I believe that candidates whose reports show credit issues from the end of 2008 are going to be given the benefit of the doubt for the next couple years.”
Knittel said she hasn’t seen evidence that poor credit is affecting candidates who come to her firm seeking employment.
“In the higher-level positions, the only thing I’ve seen is that candidates might not be paying off entire balances of debt, but they are keeping up with their minimum payments,” she said.
The bottom line: A few blemishes on your credit record are unlikely to exclude you from consideration by recruiters and hiring managers, as long as you’re prepared to explain and verify information.