Bad Credit? A Boss' Advice for Getting the Job

It’s been a rough several years, and while the employment outlook is slowly turning hopeful, those who’ve been through hell and back because of unemployment and underemployment, not to mention the economic body blows they’ve taken along the way, may find that they’re still at a competitive disadvantage for the jobs they want because of it.

A recent survey found that two-thirds of companies perform credit checks on at least some portion of their prospective hires and current employees—a practice that’s inspired much debate, given the continued high rate of unemployment. Its critics claim there is no statistical correlation between credit reports and job performance, although the assertions appear to be based on the testimony of one person in one hearing. Nevertheless, a number of states have passed legislation limiting the use of credit information in the hiring process and the Federal Trade Commission’s Bureau of Consumer Protection has issued strict guidelines to govern it as well.

Frankly, it all boils down to what the employer is looking to accomplish. I say that because when you consider the cottage industry of companies offering to do social media searches for prospective hires and the criminal and credit background checks currently taking place, the question is, are employers looking for reasons to say no or are they willing to search for ways to say yes?

An Employer’s Perspective

As an employer, some of my more challenging personnel-related decisions had to do with choosing between equally qualified candidates with diametrically opposite credit bureau reports. The companies I’ve owned and run were financial in nature and our employees were responsible for selling, processing and accounting for the flow of money. Naturally, the aforementioned checks were an important part of the vetting process, at the very least because the financial services industry happens to be the poster child for insider fraud.

What’s more, having worked with financially troubled employees in the past, my staff and I knew from experience that when job performance suffers, managers and supervisors often make matters worse when they’re unaware of the underlying reasons. These incidents also affected employee morale as they had a way of making their way through the company grapevine, especially after a humiliating public incident such as the service of a writ of wage garnishment.

Having said that, let me return to the question of employer motivation. If the candidate has the right combination of experience, capabilities, potential, character and fit, it would seem that the employer should want to hear the backstory. At the same time, if the candidate is eager for the position, it would seem that he or she should want to tell it.

Here’s how.

Facing Your Credit Issues

If you’re applying for a job that requires a background check (credit bureau report, FICO score) and if you’re having difficulties right now or have experienced them in the recent past (closed accounts, charged-off balances, bankruptcy), I strongly urge you to have a candid discussion with your interviewer before the report is ordered. It’s especially helpful when you can point to a derailing life event and can demonstrate how you’ve moved in a positive direction since that time. Over the years, I’ve heard some truly awful stories about acrimonious divorces, medical emergencies and debilitating family crises, and I can tell you this: employers who are fundamentally decent will feel a “there but for the grace of God go I” sense of compassion for an applicant who’s willing to disclose this very personal information at such a sensitive point in the interview cycle. If that’s not the case, perhaps this is the wrong company or institution for you.

If you’re having trouble and you also have a job that you value, consider initiating a similarly candid discussion with your supervisor (or human resources representative, if necessary) before the stress begins to take a toll on your performance. Speaking once again from experience, the conversation is entirely different when an employee is forthrightly disclosing this information up front as opposed to offering it as an excuse after the fact.

And finally, when life takes a turn and you find yourself in over your head, consider these action steps.

Tighten your budget. Cut whatever expenses you can and explore your options for bringing in more household income via overtime, freelance work or supplemental employment.

Refinance the debts that make sense. Focus on the interest that’s being charged for the credit card balances you may be carrying, as well as the rates you’re currently paying for your other borrowings. Just remember to take a hard look at the fees that can accompany a move from one lender to another because the money will be coming out of your pocket up front or over time. Either way, it’ll have an impact on the Annual Percentage Rate for the financing you’re contemplating and the total amount of interest you’ll end up paying.

Apply for relief before you start missing payment-due dates. No different from the advice I’ve offered about talking to your supervisor before your work begins to suffer, it’s a good idea to contact your lenders to work out an accommodation ahead of time. This is particularly true in the case of government-sponsored education loans.

Sell the things you don’t need in exchange for the cash you can use to pay down your loans. This is important: instruct your lenders to apply that cash against principal and not against your future monthly payments. That’s because installment payments are made up of principal and interest. Consequently, when you make a payment in advance of its due date, you’re giving the lender the gift of interest it hasn’t yet earned.

Look, it’s hard enough finding good jobs these days. Don’t let whatever adversities you may have experienced because of the recession, or for other reasons, take you out of the running for it. Know what your credit bureau and employment records look like (which can be accessed for free here) so that you’re prepared to advocate for yourself and the job you want.

Image: AKZOphoto, via Flickr

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