skip to main content

Can Bad Credit Keep You From Getting a Job?

Written by
Andrew Tavin, CFEI
Andrew Tavin is a personal finance writer who covered budgeting with expertise in building credit and saving for OppU. His work has been cited by Wikipedia, Crunchbase, and Hacker News, and he is a Certified Financial Education Instructor through the National Financial Educators Council.
Read time: 6 min
Updated on February 15, 2024
woman with curly hair wondering can bad credit keep you from getting a job?
You're about to get hired... then they decide to check your credit... but that wouldn't happen... or would it?

You had trouble keeping up with your bills and it led to bad credit. Now you want to fix your financial life by finding a better paying job.

Unfortunately, we may have some bad news. That new job you’re applying for to help you fix your bad credit? Your bad credit might actually keep you from getting it!

Is that fair? Not at all. It’s a terrible, vicious cycle. However, it is better to know what obstacles you will face so you can be prepared. We spoke to the experts to bring you the truth about how your credit can affect your job prospects and what you can do to overcome it.

How big is the risk?

We know that potential employers CAN check your credit history when determining if they want to hire you, but WILL they? According to the experts we consulted with, it's certainly a factor employers may consider, but isn’t a standard hiring practice.

Leadership coach Elizabeth McCourt told us that a potential employee’s financial situation has always been a factor in her particular sector of experience:

“As a recruiter in the financial services industry, I can tell you that having a clean financial record is very important. If there is a bankruptcy in your past or other credit issues, there is a high probability that this will affect the chances of getting a job offer. Particularly in the financial services business, there are strict compliance rules and firms see credit or finance issues as a potential red flag for problems down the road. Financial issues or bad credit scores are almost always a roadblock into this particular industry.”

Outside of the finance sphere, this is an issue you’re less likely to run into. Roy Cohen, career coach and author of The Wall Street Professional’s Survival Guide, recalled: “Only once in my (very long) career has a client been rejected for a job because of a bad credit report. We later discovered that the firm was about to announce a reduction in force. So, we were actually uncertain if, under different circumstances, he could have successfully talked his way out of losing the job offer.”

Cohen did acknowledge, however, that it’s more likely to be an issue when applying for jobs that require money handling. He told us “the only exception” is “jobs in which the employee handles money, has credit authority, or makes decisions about the disbursement of funds.” He went as far as to say, “when clients with credit problems reach out to me I typically discourage them from pursuing an option where I know they will be rejected. It simply makes zero sense. So failure and rejection have been mitigated.”

Consumer rights attorney Larry P. Smith explained that even if a potential employer isn’t looking at your credit history specifically, they may still pull your credit report: “A credit score can affect your job chances by getting you denied employment. There are limited reasons why someone can obtain a credit report or consumer report about a person. One of those reasons is to review an employment candidate. In most instances, employers obtaining reports about employees are not obtaining credit information. Rather, they are obtaining other background information–such as arrest or conviction records. The Fair Credit Reporting Act (FCRA) similarly governs those reports. However, some employers do seek out credit information about job candidates. In some industries, employers are concerned about having employees with a solid credit background. If someone is being hired to handle money or will be around money, then an employer may be concerned that the person is responsible with money or not desperately broke where they can be a danger of stealing. In those instances, an employer can review a credit report, not a low score, and deny them employment based on that. Note that certain legal requirements come with rejecting a potential employee based in whole or in part on information contained in a credit report.”

Smith did assure us, however, that there are states in which a potential employer is restricted from rejecting you based on your credit: “Some states have enacted laws to cover this and provide that it is illegal to review credit information of a potential employee before hiring. However, there are some caveats to those statutes. First, most of those statutes also provide for an exception to the rule if the person is applying for employment in the financial sector or at a job where money is being handled. Second, the federal FCRA preempts any state law. That is, if it is inconsistent with the federal law, then it is a null and void law. Many states have come into conflict with the federal law, and as such, we caution to rely on the federal law. The FCRA allows potential employers to review credit reports and make employment decisions based thereon.”

How can you protect yourself?

No matter how small or large the risk might be, it pays to be prepared. It’s better to have a strategy in case your credit history comes up than to try to explain how you didn’t think they would check.

Cohen recommends: “Disaster planning is effective. When you anticipate the very worst that could happen and prepare various likely scenarios, you are in a better position to either present the problem upfront or offer a reasonable explanation. Most credit problems have a legitimate origin, like a medical problem or divorce. Many of the companies that use credit reports are willing to overlook the issue as long as it doesn't appear to be a pattern of behavior. Besides, in at least 10 or more states it is illegal for companies to request or use credit history in making a decision to hire a prospective employee.”

Life coach Jeff Altman told us what you should do if you’re worried your bad credit might keep you from a job:

“If you know there is a risk of a problem (for example, if you are interviewing for a job with a bank or a financial institution that you know will do a review of your credit score), it is better to be proactive with HR during your interviews to see whether or not the impact of having a poor credit score is, ‘terminal.’

“After all, why go through so many interviews and the heartache of rejection at the end if you will be turned down no matter what you do or say?

“You can talk about how your wife/husband/partner had a business fail and how it affected the two of you. You can talk about how the two of you have been working to get out from under. You can speak about the effects of medical bills, being unable to find a job for a lengthy period of time, or any other cause that has resulted in poor credit showing up on a report.”

And if they don’t listen?

“If a firm is going to be heartless at the beginning, I can assure you they will be heartless at the end.”

You can’t repair bad credit overnight. However, you shouldn’t let it stop you from trying to get a better job if that is what you aspire to achieve.

Article contributors
Jeff Altman

Jeff Altman, (@TheBigGameHuntr) The Big Game Hunter, has helped organizations achieve their objectives by hunting down leaders and staff as employees or consultants since 1971.

Roy Cohen

Roy Cohen (@RoyCohen) is a career counselor and executive coach and is recognized as one of the country's leading experts in Wall Street career management. In addition to numerous media appearances including The Today Show and CBS This Morning, he serves on the advisory board of Men's Fitness Magazine and he was selected in 2013 as the official career coach for the movie, Lee Daniels' The Butler. He is also the author of the best-selling career book, The Wall Street Professional's Survival Guide.

Elizabeth McCourt

Elizabeth McCourt, (@ecmccourt) JD, MFA, CPCC, ACC is the President of McCourt Leadership Group. She has been a financial services recruiter for 17 years and is also an executive coach, certified by the Coaches Training Institute (CTI), in addition to certifications in the Hogan Leadership Assessment and Systemic Team Coaching. Prior, she was a trial lawyer in New Mexico with a JD from Loyola University and an undergraduate degree in Finance from the University of Maryland.

Larry Smith

Larry P. Smith is a consumer rights attorney, concentrating his practice in the areas of Fair Credit Reporting Act and Fair Debt Collections Practices violations, as well as consumer fraud claims and lemon law. He is the Managing Partner at SmithMarco, P.C. in Chicago, Illinois.


California Residents, view the California Disclosures and Privacy Policy for info on what we collect about you.