Is Your Credit Score Hurting Your Job Prospects?

May 17, 2013

One of my friends sent me this article about credit scores impacting a job search to ask my opinion. And, he confided in me that this is probably a part of the reason that his wife has been unable to find work for nearly two years and has just about given up on her quest to find another job. This is a very troubling trend in the workplace and all too often good people are being denied the opportunity to work in this dreadful economy that just hasn’t produced robust job growth.    

Here’s their story. My friend is a bright guy. He’s so bright that he was able to marry a bright, beautiful, hard working woman (I know she reads this periodically and she’s a great cook so I want my dinner invitations to keep coming…) who became the breadwinner of the family while he became a stay at home dad. Life was good!

Until 2008. In the economic downturn, she was downsized out of a very high paying job where they had their health benefits. At the same time, my friend was diagnosed with a very expensive and life threatening illness. Without her income, it was a struggle just to pay the mortgage and in that time frame, it was almost impossible to find jobs. Companies were shedding jobs like crazy, the stock market was tanking and we were experiencing the worst economic conditions our country had seen in decades.

Not only did they deplete their savings paying for the cost of medical bills, they ran up significant credit card balances. As time moved on, they depleted their retirement accounts trying to pay their mortgage while trying to sell a house with a rapidly declining value. And, the medical bills kept mounting.  Eventually, his health improved and he’s back to full speed now. But, in that short period of a few years, they got into a position where they eventually did a short sale on their home, had several credit cards go into collections, settled a few credit cards for far less than their original debt and saw their credit score absolutely shredded.

I knew about his illness. I knew about her job loss. I knew that they were incredible savers. Before kids, they both got to the IRS limit (it was about $10,000/year back then, $17,500 this year) in their 401k accounts when the rest of us were just contributing up to our company match. They were savers, not spenders and the most fiscally responsible couple I knew. They grew their own vegetables to keep their food cost low. Everything you can imagine a frugal, savings-oriented couple would do…they did it.

So, when I’d ask “Hey, are you guys OK?” at different points along the way, they always smiled and said that they would make it work, they’d get through it and that they believed that the worst was over and they’d get back on their feet shortly. What I didn’t know is that was pride talking more than reality. I didn’t want to cross any friendship boundaries and they didn’t want to either, so they dealt with a great non-profit credit counseling service to begin to address the problem.

Eventually, they couldn’t meet the payments on that debt management plan. That’s when the collections action started. Eventually, my friend got a job working for a small firm owned by a neighbor and his wife, being creative, started a small service-oriented business and they are making ends meet today.  Neither is happy with what they’re doing today and would love to find work in corporate America again.

And that’s where this article comes into play. This story talks about how your credit score could potentially prevent you from getting a job. It’s one of the major factors that my friends are facing right now. Because of a horrible economy and some significant medical bills, things that they had no control over, their credit score makes them look like deadbeats on paper.

The truth of the matter is that they were the model financial couple in my circle of friends. They did all the right things.  And now…their financial troubles are continuing to present problems. They have rebuilt a nice emergency fund, live in a reasonably priced home and are working their way slowly back to financially sound footing. But in the interim, their credit score is hurting them.

If this sounds like you, if you’re looking for a new job, if you’re having trouble finding work and think this might be a part of the reason you aren’t landing a job, if your credit score is less than ideal…what can you do?  There are a lot of resources for you online.  Order your credit reports at annualcreditreport.com. Track your credit score at creditkarma.com and creditsesame.com. Work toward paying off or paying down any and all debt and if there are old accounts in collections status, it might make sense to address them so that the healing can begin with your credit score. Don’t bury your head in the sand and hope that this all goes away. Talk with a professional, preferably an unbiased one, if your credit score is shredded and discuss ways that you can rebuild your credit score.