Not Paying Bills Can Hurt Your Job Search

From Resumark | Feb 25, 2010

Losing a job always brings financial hardship.  Many who are unemployed
struggle with paying bills on time, often ignoring them, not realizing
that their tarnished credit history could become a barrier to finding a
new job.

A recent study (conducted by the Society of Human
Resource Management) has found that nearly 60% of employers run credit
checks on job candidates.   This is almost a 20% increase from just six
years ago.

Many employers have been relying on credit histories
in hiring decisions as indicators of a job candidate's reliability. 
Even though there is little research showing a correlation between bad
credit and poor job performance, an increased number of employers
resort to credit checks.

Are you afraid that your less-than-perfect credit history may affect your job search? What can you do?

1. First,
obtain a copy of your credit report and study it carefully to make sure
it is accurate and errors-free. You can get a free annual credit report
from all three agencies (Experian, Equifax and TransUnion) online at https://www.annualcreditreport.com.   If you notice any errors, report them to the appropriate credit agency.

2. Always 
pay your bills on time.  If you are having financial troubles, not
paying your bills or ignoring them is not a solution to the problem. 
What you want to do is reduce your spending to a level that you can
afford. This could mean saving money on utilities, cancelling cable TV,
etc.  Work with your creditors to make payment arrangements or a
payment plan. Experts agree that paying bills on time is the best thing
you can do for your credit history:  just two months of making payments
on time can improve your score by as much as 30 points. 

3. If
you are offered a position pending a credit check and you are afraid it
will not show you in the best light, be upfront about it with the
employer.  Being open and honest about it may put you back in a
positive light. However, don't apologize for your financial problems.
Be direct about it and show that you've handled the problem(s).
Ultimately, this is what employers want to see.

4. Understand
your rights.  Under the Fair Credit Reporting Act (FCRA), employers
must gain permission to a credit check on you. They must notify the job
seeker if the credit report was the reason they weren't hired. 
Employers must also provide job seekers with a copy of the obtained
report so that they can study it.

Some states (for example,
Washington and Hawaii) limit employers' rights to use credit reports in
hiring decisions. Also, there is a bill in the Senate: H.R. 3149: The
Equal Employment for All Act, introduced in 2009, which aims to amend
the FCRA to prevent employers from using credit checks altogether.