Credit and Your Job Search

Posted by David B. Wright

June 17, 2008

I’m sure most of you know that it’s important to have good credit, especially when you’re planning to take out a loan to buy a house, a car, a boat, etc. Some of you probably know that, when companies are making a hiring decision, many will do a criminal background check in addition to checking your references and past employers. But how do these two tie together? I was talking yesterday with an employee of CCCS, or Consumer Credit Counseling Service, who informed me that overall, 35% of employers are pulling credit reports of job candidates. For jobs in the financial industry or other positions dealing with cash, money, budgets, and so on, that number is much higher.

(On a side note, he also told me that CCCS will be hiring for about 100 positions over the coming months, so if you’re interested, check the jobs page of their website.)

If your credit is shaky or worse, there are ways to improve it. The first step is getting copies of your credit report from each of the three major credit reporting agencies. These are Equifax, Experian and TransUnion. Depending on the laws in your state, you may be able to get 1 or 2 free copies of your credit report per year. In Georgia, it’s 2 per year. You can pay extra to get your credit score, but for the purposes of a job search it’s not necessary. When you get your credit reports, go over them carefully to make sure they are accurate - 20% of all credit reports have mistakes on them.
By the way, if your credit is not so good, do your homework before working with a credit repair or credit counseling company - some (like CCCS, which has Clark Howard’s stamp of approval) are good and reputable, while others prey on the uninformed and charge for things that can easily be done for free, or worse - make promises on which they can’t deliver.

Even if your credit isn’t bad, you can always benefit from having better credit. There is a cost to bad credit, and the better your credit score, the better your ability to negotiate (or even get without negotiating) lower rates on credit cards, lines of credit, mortgages, and other loans.

For example, on a $300,000 house purchase, a difference of just 1% on a 30-year fixed mortgage can make a HUGE difference in the amount you pay. At 6.5% over the life of the loan, making regular monthly payments on time, you’d pay $382,633.47 in interest. At $7.5%, you’d pay $455,151.67, a difference of $72,518.20. That could either fund or go a long way towards funding a child’s college education for you parents out there.

I don’t know whether anyone has studied the impact of better credit on salaries, but I wouldn’t be surprised if better credit could be linked to higher salaries.

To your success,

David B. Wright
Author, Get A Job! Your Guide to Making Successful Career Moves
www.thegetajobbook.com

Bookmark It