Job Hunting? Keep Your Credit Clean

Maintaining a good credit history does more than keep your interest costs down-it can help you get a job.

The job market is a lonely and desperate place. Remember the 1982 film Tootsie? The character, Michael Dorsey, played by Dustin Hoffman, had such a hard time finding roles as an actor, that he threw on a wig and a red sequined dress to land roles as an actress. Before you consider such extremes, try polishing up your credit report. You just might get a leg up on those who don't.

The federal government and many private sector companies routinely run credit checks on job applicants and employees. They then use this information to make employment decisions, like whether or not you should be hired, fired, or promoted.

Rules of the game

The Fair Credit Reporting Act (FCRA) regulates how employers access and use your credit information. Any prospective employer wishing to run your credit report must get your written permission first. You have the option to withhold that permission, but doing so will probably destroy your chances of getting the job.

Once the company receives your credit information, there's really only one rule that limits how it can be used. While these firms can make their own judgments about late payments and big debt balances, they're not supposed to make their decisions based on bankruptcy filings. Unfortunately, bankruptcy filings are often preceded by other credit problems. And that information can be used against you.

The FCRA also requires organizations to tell you if your credit information is the basis for an action taken against you. You should first receive a copy of your credit report, and an explanation of your rights under FCRA. Then the employer must provide you with the contact information of the credit reporting agency and notify you of your right to dispute the information.

The real world

The FCRA makes it difficult for an employer to deny you a job, rescind an offer, keep you out of a promotion, or fire you, based on your bad credit. Instead, employers might be tempted to take the desired action against you, and then claim it had nothing to do with your credit. Since there isn't any way to police this, it probably happens often. That's why it's important for you to be aware of what's in your credit report because, despite the FCRA, you may not even know when your poor credit is holding you back.

Most employers don't care if you missed a credit card payment four years ago. But if they find an obvious trend of poor credit management, they might consider you irresponsible and therefore ineligible for their job. The best way to avoid this is to manage your credit wisely, starting today.

Having great credit doesn't guarantee that you'll land that dream job. But it's another thing you can do, short of changing your name and wearing a dress, to improve your chances.