Credit Score and Employment


If someone were to say that a good credit score helps you in getting a loan you would agree with them immediately. However if someone were to tell you that it helps you in getting a job you would be a little skeptical. Right?  Though your disbelief is justified; but making a background check for an applicant now includes looking at the Credit reports. It is a growing trend and here we will try and understand the relationship between the employment and credit reports.

Though this trend is recent in India; internationally it’s part of the standard background check done for employees. The employer might ask the applicant to present the credit report during the interview. In case you have been asked to so you could get a report from CIBIL or there are lot of options available for free credit reports too.

Why Employers Look at Credit Reports?

Employers want to hire people who are organized, disciplined, honest with responsible. It’s difficult to trust someone who cannot manage their own lives or finances or tends to live beyond their means. A bad credit report means either you are simply sloppy with your finances or deliberately dishonest.

In case you just forget to pay you credit card bills, EMIs on time it reflects that you are not organized. If one cannot be meticulous in their personal life cannot be expected to do so in their professional lives.

A bad credit score can also reflect malafide intention.Default in payments for both loans and credit card can also be due to the fact that the creditor has no intention of paying the due amount. This is more likely in cases of personal loans and credit cards. Non-payment of credit card bills or delay in payments reflects a person’s habit of spending first and thinking later. These are not desirable traits in a prospective employee.

A person in a debt trap can be a huge liability for any company. Any financial issues are likely to affect a person’s performance and also the environment he works in. Companies especially in the financial and banking sector may often share valuable and sensitive information with the employees. Before they do so they would like to be sure about the trustworthiness and integrity of the concerned person. Also for officials being hired for top management positions a clean financial history is almost a must if they are be trusted with the company’s affairs financial or otherwise. Any digressions by the employee can put the company in the dock. In the current scenario it may result in corporate houses having to pay huge amounts as compensation. A credit report is a reflection of numerous variables so it also throws some light on a person’s behavioral pattern apart from his financial health.

Currently a minister is in the news for wrong reasons; because he defaulted on a loan. This just gives a sneak preview of how things will be in future.

What Should Individuals Do ?

It is prudent for any individual to maintain a healthy credit score. Taking loans after careful analysis, paying EMIs on time, and limited credit card spending with timely payments can help you in maintaining a healthy score. As of now all companies do not ask for the credit report but soon it will be not the case. Soon even for renting an apartment a credit report may come in handy.  Since the data cannot be shared with prospective employers by CIBIL the company will ask you for your credit score. So be sure you are ready with your credit report review. In case there is some error in your report then take it up with CIBIL and get it rectified or if there has been a genuine lapse by you then explain it during interview. A credit report is one amongst the many factors that affect the selection of the right candidate. A small error or lapse should not eclipse your job prospects.

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James is a financial expert who has contributed several business and finance related articles. His expertise and first-hand knowledge of economics makes his blogs and articles informative and helpful for those looking out for guidance and assistance in matters related to finance. He has an active schedule of TV and radio interviews He is co-host of the popular VT Radio show Jim and Gordie Show. latest-articles-buttonJim comes from an old military family dating back to the American Revolution. Dozens of Confederate ancestors fought for the South in the War Between the States. Uncles fought in WWII and Korea. His father was a WWII P-40 and later P-51 Mustang fighter pilot. Vietnam found several uncles serving, a cousin, and brother Wendell as a young Ranger officer. His mother was a WWII widow at 16, her first husband killed with all 580 aboard when the SS Paul Hamilton, an ammunition ship with 7000 tons of explosives aboard, was torpedoed off the coast of Algiers. He has been writing, speaking and doing public relations, television, consulting and now multimedia work for a variety of American heritage, historical, military, veterans and Intel platforms. Jim’s only film appearance was in the PBS Looking for Lincoln documentary with Prof. Henry Lewis Gates, and he has guest lectured at the Army Command and General Staff School at Fort Gordon. Currently he is working to take his extensive historical video archives on line to assist his affiliated organizations with their website multimedia efforts, such as the Military Order of World Wars, Atlanta, Sons of the American Revolution, Sons of Confederate Veterans , Assoc. for Intelligence Officers, the Navy League, Georgia Heritage Council, National Memorial Assoc.of Georgia.

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