Can I Lose My Job Due to Bad Credit?
We know that when we apply for a loan, the bank or lender is going to check our credit reports and credit scores. A high credit score is good, a low credit score is not so good.
Just having a low credit score does not necessarily mean you will denied a loan. Different lenders use different scores to determine if a loan is approved or not.
One lender may require a credit score of 680 to be approved for a loan, a different lender may require a credit score of 650.
It can vary among lenders.
However, while we may make the assumption that our credit histories will be reviewed to get a loan, there can be some areas our credit may be checked that we may not be aware of, things like when we apply for some jobs, and some insurance policies.
There are some jobs in finance, and the legal profession, and if the job requires you handle cash, that an employer may require to see your credit file.
This raises a few questions, and also some concerns.
A: Unfortunately the answer to this question is yes, an employer may not hire you for a job if you have bad credit.
It may be the employer or company have a strict policy on credit and their employees, or it may be as simple as the job comes down to two (2) applicants, one who has good credit, and one who has bad credit.
The applicant with good credit may very well get the job.
A follow up question may be: Is this fair or right?
A: Maybe not to the person being denied the job, and it may not feel right, but an employor is within their rights to hire who they wish, and if the hiring process or criteria includes credit scores, then they can deny hiring someone with bad credit.
But again we must keep in mind, not all employers use credit as a hiring criteria, and not all jobs require a credit check.
In most instances if a credit check is part of the hiring and background check process, the employer will state this to you prior to you applying, in addition, you have to give the employer permission to review your credit.
There are some things you can do prior to applying:
* Review your credit history and credit score, review it for any errors or omissions and have these corrected.
* Get on the electoral roll as this is how lenders verify you and your address.
* Pay your bills and accounts on time.
* Close any unused accounts (credit cards), but not your oldest accounts.
* Do not apply for a lot of credit, inquiries or footprints, can lower your credit score.
Q: If footprints and inquiries lower my credit score, will an employer checking my credit lower my credit score?
A: No, credit checks for employment and jobs do not show up as a “hard inquiry” on your credit report, so they do not affect your credit score.
These types of inquiries are called “soft inquiries” and are not seen by others who look at your credit file, only you can see them.
Q: Does my job or how much I earn affect my credit score?
A: No, credit files do not show employment status or what your wages are. They also do not show any bank records or savings.
Your employment status and wages can indirectly affect your credit score in how you can afford to repay your bills and accounts, which do affect your credit score.
Q: I am self-employed, does this affect my credit score?
A: Being self-employed does NOT affect your credit score. Credit scores are based on how you pay your accounts, how much you owe, and other factors.
Being self-employed is not used as one of those factors.
However, being self-employed may make getting credit or a loan more difficult as you need to show proof of income.
Also being self-employed your income may change and fluctuate, which can make repaying bills and accounts difficult, and easier to miss a payment or pay late, which does affect your credit score.
Q: Suppose I lose my job through redundancy and have to sign-on for benefits, will this affect my credit score?
A: No, just by losing one’s job, and receiving benefits alone does not affect your credit score. This change in income could affect how you pay your bills and accounts, which then could affect your credit score.
Q: Can I be dismissed from my job due to bad credit?
A: This is a tricky question and has a lot of “ifs” attached to it.
Most employers if they are going to check your credit file, it is as a part of the hiring process, not later on while you are working there. However, there can be some jobs, with some security clearances where a credit check is done periodically or from time-to-time.
If your work contract states so, or if your terms of employment and employers working criteria state bad credit poses a risk to your ability to perform your job, there is a possibility you could be dismissed for having bad credit.
This would be rare, and only for certain financially sensitive jobs, and your credit would have to be pretty bad and pose a risk.
As we can see, our credit scores and credit lives, can spill over to our careers and jobs.