9 tips for job seekers with bad credit
As the recession drags on, the unemployment rate continues to climb among people across the economic spectrum, as do foreclosures and bankruptcies. To add insult to injury, more employers are running credit checks on potential employees as a standard part of the screening process.
The good news is you can still find a well-paying job even if you have lousy credit. Paradoxically, 'fessing up to past credit mistakes may even provide a chance for you to soar above other applicants in the eyes of your future boss.
Here are some ways to improve your chances of finding your next job despite past credit dings.
1. More employers run credit checks on job applicants. Credit reports are a critical part of the hiring process in industries where employees -- from bank tellers and armored-truck drivers right on up to accountants and chief financial officers -- routinely handle significant amounts of money in the course of their days. In industries where this isn't the case, an employer may still run a credit check to help determine what kind of employee a candidate will be, since a good credit history can provide a glimpse into a person's character and level of maturity. "Someone who pays bills late, has had accounts turned over to collection agencies or who's declared bankruptcy is rightly or wrongly considered to be someone with a lower degree of integrity," says Susan Wilson Solovic, author of "Reinvent Your Career: Attain the Success You Desire and Deserve."
2. Be the first to bring it up. A credit check usually happens after the first interview -- an employer wouldn't invest the time and money unless you've cleared the first hurdle -- although occasionally the first time you'll hear about it may be when you're offered the job. In either case, get busy. "It's best to tell an interviewer about your credit history as soon as possible," says Dianne Gubin of Tech Exec Partners, a staffing firm in Calabasas, Calif. "The more that you reveal upfront, the more likely that you will continue with the interview process." Your disclosure should go well beyond your credit history. "Besides credit issues, I also advise candidates to tell an interviewer about anything else that might come up on a background check," she adds. Kimberly Schneiderman, a New York-based job search consultant, agrees. "Employers will see that you have the integrity to own up to a potentially embarrassing situation, and it will also point favorably to your forthrightness and honesty, which are two highly regarded attributes in most jobs," she says.
3. Demonstrate a strategy. Once you've revealed the true state of your credit history to a potential employer, it's time to show the actions you're actively taking to improve your credit, from paying down debt to refinancing your mortgage. Solovic suggests you go one step further and bring your own copy of the credit report to the interview. "This clearly shows that you're not trying to hide anything," she says.
4. Have an explanation ready. If your credit was damaged due to personal reasons and not irresponsible behavior, that may help you get a pass. For instance, if you or a family member were out of work for an extended period, or your unemployment benefits ran out, a potential employer may overlook a poor credit history. Likewise, if a medical situation caused your credit to deteriorate, whether it involved you or a family member, an employer may empathize.
Someone who pays bills late, has had accounts turned over to collection agencies or who's declared bankruptcy is rightly or wrongly considered to be someone with a lower degree of integrity.
Susan Wilson Solovic
5. Prescreen the company and the job. If you don't want your credit report to determine your potential as an employee, avoid those employers that rely on them as a matter of course. It's a given that state, federal and local governments will automatically pull a credit report on a future employee, especially if the position requires a security clearance; any company that contracts to do business with the government will likely do the same. However, some companies that pull credit reports on prospective hires do so only for jobs at midlevel management positions or higher. On the other hand, even the lowest-level job at some firms may require a credit check. "If a business is regulated in any way, such as a nonprofit, it'll be more likely to run a credit report," says David Couper, a career coach in Los Angeles.
6. Target smaller companies. Small businesses with only a few employees and companies with high turnover are less likely to run credit checks on future hires. They don't have the time or the resources.
7. Rely on personal connections. Restrict your job search to networking with people who know you -- and vice versa. If you already have a relationship with a potential employer, she may be less likely to consider a good credit report as a condition of employment. "Receiving a recommendation from a friend or colleague of the employer will help you create a positive impression," says Couper.
8. Stress why you are the perfect candidate for the job. "If an employer believes you are the best match for the job, he may be more tolerant of your credit issues," says Couper. "If you're able to prove what you can do for the company and that you're head and shoulders above the average applicant, you may be given some latitude."
9. Apply for the job anyway. While some companies draw a line in the sand and automatically reject all potential employees with poor credit, others take a more laissez-faire approach, which is almost impossible to research in advance. When Connie Thanasoulis-Cerrachio, a career coach and former head of staffing for Merrill Lynch Investment Managers, discovered that a promising candidate had credit issues, she didn't automatically dissuade him from continuing to interview for the job. "He explained how he got into his mess," she says. "If his explanation wasn't a good one, we probably wouldn't have hired him." She believes that sometimes bad things happen to good people. "In that case," she says, "I like to give the candidate the benefit of the doubt and proceed anyway, because it depends on the job, the explanation and the overall honesty of the person."
See related: Help for bad credit, More employers run credit checks on job applicants, Better credit can mean better job prospects, Credit checks for job applicants become more common, Reduce unemployment benefit card fees
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