It’s Bad Credit Education Month at OppU. Click Here to Learn More!
Yes, You Can Get Fired For Having Bad Credit
If you were to make a list of things that would get you fired, where would you rank “having a bad credit score?” Surely it would be below all-time classics like “stealing money,” “calling your boss a bad word,” and “insisting that your coworkers call you Lord Fancy Pants The Fourth.” Honestly, most people don’t even realize that you can get fired for having a poor credit score.
But you can! And while it’s unlikely that a lousy credit score will get you canned—it’s much more likely to stop you from being hired in the first place—it certainly can happen, especially if you’re in one of the many states that don’t restrict the use of employer credit checks.
Employers can check your credit before and after you are hired.
When it comes to credit checks and the possibility of unemployment, you are much more likely to run into problems while applying for a position than you are after you’ve been hired. Checking credit history as part of a background check is a fairly common part of the hiring process.
Depending on how that long hiring process lasts, though, you might end up serving in the job for a while before the employer gets the results and decides to terminate you. Additionally, employers can run a credit check after you’ve been hired or if you are up for a promotion and let you go if the results send up a red flag.
(Everything in this section depends on which state you live in. For a list of states that restricts how employers can use credit checks, scroll down.)
One thing that’s important to note here: These pre-employment credit checks will not actually return a copy of your credit score. Instead, they will only return a copy of your credit report. This will allow employers to view, for instance, your debt-to-income ratio and your history of bill payments.
Even with just a copy of your credit report, employers will be able to get a pretty good idea of how you have managed your debts over time, even if they aren’t given a single score to sum it all up. So if you have a bad credit score, your employment status could be at risk.
While there are no defined limits on what roles can require a credit check, it tends to be much more common in certain industries and job types than it is in others. Jobs in financial industries or finance positions—especially ones where you will be handling large amounts of money—commonly carry requirements for a credit check.
Certain states and cities limit what employers can do with credit checks.
If it hasn’t been made clear by now, the laws under the Fair Credit Reporting Act (FCRA) that dictate employer credit checks give them a fair amount of leeway. While a current or potential employer needs your permission to run a credit check, refusing to grant them that permission pretty much means that you either won’t get the job or won’t have your current job for long.
This is why 13 states, two cities, and the District of Columbia have passed laws limiting employers’ ability to check people’s credit. According to the good folks at Microbilt, an alternative credit reporting agency, the following areas have laws designed to rein in how employers use a person’s credit information:
- Chicago, Illinois
- New York City, New York
- Washington State
- Washington, D.C.
While the specifics vary from state to state (or city to city), many of them limit credit checks to managerial positions, finance jobs, or public safety officers. Some also limit what decisions can be made with this information, while a few of them outright ban the practice entirely. If you live in one of these areas, you can read more about your local laws in Microbilt’s report: State Laws Limiting Use of Credit Information For Employment.
When you have bad credit, an unexpected bill can mean having few options to get by. But it can also affect your life in ways you might not expect.