If you're on the hunt for a new job, you might be feeling frustrated by the lack of options out there. You've perfected your interview answers, had your resume touched up over and over again, and wrote the perfect cover letter- so why aren't you hearing back from potential employers? FreedomPlus has found that one unlikely source may be to blame- your credit score.
Employers are not allowed to view your credit score or credit history without your approval, but many employers view your willingness to divulge your credit report as a measure of personal financial responsibility. FreedomPlus has found that industries like government and finance are the most likely to ask to view an applicant's credit report; these types of positions often require handling cash, sensitive information, or making informed financial decisions on behalf of the company or its clients.
If you have poor credit or no credit, there is some good news. First of all, FreedomPlus has found that there are at least twelve states that expressly prohibit or severely limit employers use of applicant's credit history in making hiring decisions. Even if you do not live in one of these states, your employer will still not be able to view your actual credit score, only your credit report. Your credit report shows things like instances of missed payments, and accounts in which you hold large balances.
Still worried about how your credit history is affecting your job search? FreedomPlus offers tips on some ways that you could try to improve your credit score and help show potential employers that you're responsible and ready for the challenges of a new job:
- Find your credit report. The first step to improving your credit is to know what's on your credit report! Under federal law, you are entitled to a free pull of your entire credit history once every 12 months. Using sites like AnnualCreditReport.com, do a thorough review of every item contributing to your credit makeup, and dispute any items that you believe are erroneous or inaccurate. Under the Fair Credit Reporting Act, credit bureaus are required to look into any credit disputes brought up, and if they cannot find documentation supporting the claim, remove the item from your credit history.
- Seek help from the professionals. If your credit report has turned up factors that you don't want your future employers to weigh your application on and you're not sure how to go about fixing it, there's no shame is seeking help from financial professionals. If you don't fully understand credit or credit scores, you certainly aren't alone; about 60% of college students could not define a credit score, 45% were unable to identify factors that contributed to a credit score, and about 42% could not name one way to improve a credit score. FreedomPlus recommends seeing a financial professional because they will give you a definite set of actions that you can take to begin improving your credit report in as little as six months- this will help you get started not only to more gainful employment, but also on the road to a more healthy financial future overall.
- Get your credit cards under control. For most college students and recent graduates, credit card debt plays a major role in the formation of bad credit. If you have a credit card with a balance that you have been neglecting, take steps to curb your spending so that you can put that extra money towards paying down your balance; about 35% of your credit score makeup comes from your payment history. Additionally, ensuring that you're making your student loan payments on time and in full will help you to avoid negative credit impacts. Ideally, you should curb your spending to use as little of your line of credit as possible- in most cases, 10-30% is advisable.
While building credit or working your way out of a credit slump can be difficult, it is not impossible. By taking steps to control your spending, learn about what affects your credit score, and talking to the finance pros, you could begin to see improvements in your credit history in as little as a few months!