Can Your Credit History Hurt Your Job Search?

Will past financial misfortunes return to haunt you when employers check your credit history? Back in April 2010, I painted a relatively rosy picture: While most companies will run a full credit report on any candidate with access to its finances, monetary missteps are not generally grounds for eliminating candidates. (Meanwhile, the Privacy Rights Clearinghouse points out that bankruptcies, tax liens and other skeletons in your financial closet are off-limits from background checks after a specified period.)

Nevertheless, in the wake of the current credit crunch, hiring companies have begun to focus more attention on candidates' financial histories. In a story titled "Bad Credit Derails Job Seekers," Wall Street Journal reporter Kristen McNamara cautions that a growing number of professionals are finding themselves out of the running because of blemishes in their financial histories.

"Concerned about rising rates of employee theft and fiduciary issues, more employers are conducting credit background checks on applicants for some positions," McNamara writes. "Companies say the financial information can offer insight into a candidate's level of responsibility. But people whose previously solid credit has been damaged by the economic downturn say they are victims of circumstances beyond their control."

So what's a candidate to do? Like any other aspect of your job search, preparation is the key: The prospective employer will need to ask your permission before it conducts a background check (usually through a third-party agency). You have the tools to check your own credit -- and just as you should with any other issue that might arise in a job negotiation, you should use those tools so you've got your answers ready if they arise.

As McNamara reports, "Consumers can request one free credit report each year from each of the three nationwide credit-reporting companies--Equifax, Experian and TransUnion--through AnnualCreditReport.com. You are also entitled to a free report in certain situations, including if you are unemployed and plan to look for a job within 60 days, or if a company says it didn't hire you because of your credit history."

Meanwhile, keep your nose clean, and use your job search as an excuse to exercise tighter oversight of your finances. A welter of free Web sites -- from Mint.com to CarInsurancePriceCheck.com -- will help you navigate your funds, easing the stress of the hunt and the worry that a financial ding will mar your chances at employment.