If you’re in the market for a new job, you may not even be aware that some prospective employers will consider your credit score when you apply for various positions. A credit score is a three-digit number that shows how likely you are to repay your debts. Lenders and creditors often look at your credit score when you apply for personal loans, debt consolidation loans, and credit cards. But sometimes employers use credit scores too.
Why Employers May Look at Credit Scores
Most employers will focus on your experience and educational background when you apply for a job. They want you to have the expertise to perform the job well. For example, an employer might want to see relevant marketing experience on your resume if you apply for a marketing role. On the other hand, if you apply to be an engineer, they may prefer a degree in engineering.
You may be surprised that some employers will also evaluate your credit score when you apply for jobs. Here’s why:
Your credit history can provide them with valuable information. If you have a good credit score, it can indicate you’re responsible with money, and they might assume you’ll also be responsible at work. On the flip side, it may raise some flags if you don’t have the best credit score, and they may wonder about your ability to handle responsibilities. This may be relevant when you’re applying for management positions or the job responsibilities include handling money or other company assets.
Places That Limit Credit Score Consideration in Employment
Whether an employer will look at your credit score when you apply for a job will depend on their unique hiring process and priorities. Where you live will also play a role. There are currently a number of states that limit how employers can use credit scores. These states include:
- California
- Colorado
- Connecticut
- Delaware
- Hawaii
- Illinois
- Maryland
- Nevada
- Oregon
- Vermont
- Washington
And some cities also have laws in effect that limit credit considerations in job applications, like New York City, where employers must “restrict the use of credit information in employment.” Check your local city and state laws to see if employers in your area can check your credit report and if your credit history can be a factor in the hiring process.
How to Improve Your Credit Score
Fortunately, there are several ways you can boost your credit score and position yourself as a better candidate when you apply for jobs. Here are some tips.
- Pay All Your Bills on Time: Do your best to pay all your bills on time. These bills may include your mortgage, rent, personal loans, student loans, car loans, and credit cards. Realize that even one late payment can affect your credit score.
- Look for Errors: Visit a website like AnnualCreditReport.com to pull copies of your credit reports from the three major bureaus: Experian, Equifax, and Transunion. You can request your credit report from each bureau for free every 12 months. It’s also a good idea to spread out your requests throughout the year rather than pull all three reports simultaneously. Review each credit report carefully. If you find any errors or inaccuracies, dispute them right away with the right bureau and the creditor that supplied the information to the bureau.
- Lower Your Credit Utilization: The credit utilization ratio, which makes up about 30% of your credit score, represents the amount of revolving credit you use versus how much credit is available to you. Ideally, you’d keep your credit utilization ratio to no more than 30%. To lower your credit utilization ratio, pay down debt or consider requesting credit limit increases, but only if you’re confident you can manage the new credit limit.
Bottom Line
Employers focus on many aspects of your application when you apply for a job. Since some of them will look at your credit score, it’s important to keep it in good shape.
Notice: Information provided in this article is for information purposes only and does not necessarily reflect the views of easyreadernews.com or its employees. Please be sure to consult your financial advisor about your financial circumstances and options. This site may receive compensation from advertisers for links to third-party websites.
