How to Explain Bad Credit in a Job Interview

Employment Tips for People with Bad Credit

Once upon a time, all you needed to get a job was a resume and a handshake (being someone’s cousin didn’t hurt). But that’s all changed in the modern age, when your credit history is weighed alongside previous work experience and where you went to college. That means knowing how to explain bad credit in a job interview is more important than ever.

But even if you have a few blemishes on your financial history, that doesn’t mean you have to give up your dream job. While it can be more difficult–and even a bit embarrassing–there are steps you can take to win over a potential employer and turn a negative into a positive. Here are some employment tips for people with bad credit.

Tips for Getting Hired with Poor Credit

Permission for Credit Check – Before you learn how to explain bad credit in a job interview, you first have to give permission for your potential employer to run a credit check. Just because you apply for a job doesn’t give a company the right to start snooping around your financial history. In fact, the Fair Credit Reporting Act states that you must give written permission for a prospective employer to do so. Most job application forms will usually have an area for you to check so they can have access to your credit history. You can, of course, choose not to give permission, but this is going to send up red flags to the person evaluating your application.

Explaining Bad Credit – If you are asked to give permission for a credit check, that’s the time to bring up past financial problems with your future employer. Otherwise, they will find out anyway, and it will appear as though you were trying to cover it up. In most cases, a company will only run a credit check after you’ve passed the first phase of the interview process.

When you know a credit check is imminent, make an appointment to speak with your potential employer. Be honest with them about the state of your financial history, and offer examples of what you are doing to improve it. Any documentation you can provide to show that you’re making good on past monetary commitments is always a plus. This can be as simple as paying down your revolving credit card debt or refinancing your mortgage.

If you have any other embarrassing facts in your past that might come up during a background check, this is also a good time to mention them. Again, honesty is the best policy. Always maintain eye contact and explain the situation in as much detail as you feel comfortable with. Some employers may cross you off their lists, but others will be impressed with your honesty and willingness to take responsibility for your actions.

Some people are simply too embarrassed to speak directly about their bad credit. If you fall into this category, write a letter to the hiring manager (or whoever actually makes the final decision on jobs at the company) and explain your situation. Just like the face-to-face option, be direct and show the steps you’re taking to reform your credit.

Job Application Tips for People with Credit Problems

Screen Out Employers Who Check Credit – If you want to avoid having to explain bad credit in a job interview, it’s a good idea to screen out those companies that require a credit check to work there. You can search their website to see if there’s any information on the subject, or you can call the human resources department and anonymously ask if they require a credit report for job applicants. If the answer is “yes,” you can mark them off your list.

Government jobs will always require a check of your background, both financial and personal. Companies that do work for the government are also included, as well as any position that requires a security clearance. Even nonprofit organizations are candidates.

Your best bet is to focus on small companies with only a few employees. Running a credit check on dozens of applicants isn’t free, and smaller outfits may not have the time or money to engage in the practice.

Network - If you know the person who does the hiring, or if you’re a friend of a friend, you’ll have a much better chance of avoiding a credit check. When you’re in the market for a job, talk to friends and family to search for promising leads.

Talk about Credit Disputes – Almost 80 percent of credit reports contain errors, and this incorrect information can have a negative impact on your credit rating. Get a free credit report (the law allows you a free one each year), check it for mistakes, and then dispute any errors that you can prove. If an employer runs a credit check, be sure to point out any items that are currently under review by the credit bureau.

It’s also a good idea to examine your credit report before you start applying for jobs. This will allow you to learn about potential problems before an interviewer brings them up.

Apply Anyway – Some companies will have a policy of automatically rejecting anyone with bad credit, while others will be more flexible. There’s really no way to know which camp your potential employer falls into, so go ahead and apply if it’s a job you’re especially interested in.

Bad credit isn’t the end of the world, although it might seem like it at times. Sure, learning how to explain bad credit in a job interview can be a frustrating experience, but it’s a skill to be mastered like any other. By following the advice I’ve listed above, you stand a much better chance when your future employer asks you for permission to delve into your financial history.