Bad credit can spell disaster for your financial opportunities. When you don’t have a stellar credit score, you could find it difficult or even impossible to qualify for the best loans, credit cards, and more. If you want to buy a house, make a big purchase, or have an emergency line of credit open for your business, you need to increase your credit score ASAP.
But that credit can also have worrying effects on your employment prospects. Indeed, you may find that you were denied employment because of bad credit. But what if that bad credit score is because of one or more errors? Read on to learn what to do if a credit score mistake leads to a missed employment opportunity.
What constitutes a “bad” credit score can vary from place to place. However, most prospective employers look at the FICO credit score, which is compiled by the three major credit bureaus. The FICO scale ranges from 300 to 850.
Under the FICO score scale, a credit score of 300 to 579 is considered to be “poor.” With a credit score in this range, you’ll find it difficult to qualify not only for high-value jobs but also for some of the best loans and other financial opportunities, like credit cards with low APRs and fees.
Other credit scores and their rough values include:
Each employer may look for a specific credit score or at least check to see whether a job candidate meets a certain threshold. But few employers will tell you outright what threshold they are looking for.
Your credit matters for job opportunities because it's a rough estimate of your overall creditworthiness and financial responsibility.
If you have a high credit score, your prospective employer sees that you can be trusted with money. With a high credit score, you most likely pay your loans on time, don’t take out unnecessary lines of credit, and don’t miss regular payments.
The reverse is also true, of course. If your credit score isn’t great, your employer might think that you aren’t the best with money or that you can’t be trusted with financial decisions.
Your credit doesn’t matter for every potential job opportunity. But it does matter for job positions where you will manage other people, where you will handle large sums of money, or where your financial background may reflect on your employer in some way.
Say that you are applying for an executive position at a lending institution, like a bank. When you apply for that position, the employer wants to know that you know how to handle money properly. They also want to know that your credit or financial background won’t cause trouble later down the road (for instance, it would look bad for the bank if one of its primary loan officers/managers files for bankruptcy).
If you have a bad credit score, that bank may choose not to employ you in favor of another applicant. It’s safer and wiser from their perspective. Given this fact, it’s a good idea to keep your credit score as high as possible.
Employers are allowed to deny you employment opportunities on the basis of bad credit. But according to the Fair Credit Reporting Act, they must tell you this fact in the form of an adverse action letter.
If an employer does a background or credit check on you and sees that you have a bad credit score, they may first send you a pre-adverse action letter. This tells you that they are considering not hiring you on the basis of your credit (or some other element of your background info). It gives you a chance to look into your credit report, identify inaccurate information, and correct the record if needed).
If the employer decides to go through with that decision, they should send you an adverse action letter stating that fact. Note that your adverse action letter doesn’t have to point out the specific reason why you were denied employment; it just has to state that you were denied because of your credit score.
Still, this can be valuable information for job hunters. When you learn that you lost out on a job offer because of your credit score, you know it’s a sign to take a look at your credit report and see if there’s any erroneous information to fix.
Credit report errors are mistaken line items or other information on a consumer’s credit report. Under the terms of the FCRA, you are entitled to one free credit report from the major credit bureaus each year, so it’s always a wise idea to look over your credit reports regularly.
Credit report errors can include:
Any and all of these errors can look bad to an employer checking your credit report. If you notice one or more mistakes, you need to know how to fix them quickly.
Credit report errors can happen for many different reasons.
For example, a credit furnisher – that is, any organization that provides credit data to the credit bureaus, like utility companies, lenders, etc. – might simply make a mistake due to human error. Someone might transpose a letter or number in your file, for instance, or they might accidentally mistake you for another person if you have a common name that is similar to another person in their database.
However, credit report errors can also occur because of laziness or negligence. For instance, if a credit furnisher knows that you paid off your bill, but neglects to note that to the credit bureaus, the bureaus might think that you still have to pay down your bill and have missed one or more payments.
In those cases, you certainly have a right to pursue a resolution, usually through a dispute letter. If a credit furnisher or other negligent party refuses to correct the erroneous information, though, you may even have grounds for a lawsuit or other legal action.
Credit report mistakes can be frustrating to deal with, and they may even put your job opportunity in jeopardy. Luckily, you do have ways to resolve these issues.
First, you should check for any further errors. If you notice one error on one credit report, such as from your Experian credit report, you should check the credit reports from the other bureaus, TransUnion and Equifax. Each credit bureau draws up its own credit report, so it’s a good bet that one error will show up on the others, as well.
Your next step is to file a dispute letter with the credit bureaus in question. Each credit bureau allows you to file a dispute letter online or using physical mail. The former is usually a better bet, as it means the credit bureaus will receive your dispute more quickly.
Once received, the credit bureaus have 30 days to investigate the issue and correct any erroneous information they discover. If your job opportunity is on hold, don't hesitate to contact your prospective employer and tell them that you are fixing the problem.
What if a credit bureau, credit furnisher, or other organization doesn’t abide by the regulations outlined in the FCRA? If they violate your rights by not fixing erroneous information, for instance, you could have grounds for a lawsuit.
That’s when you should contact credit report error attorneys like Fair Credit. The right legal professionals can assist by:
If your lawsuit is successful, you could recover up to $1000 or more in damages.
Ultimately, no one should be denied employment because of inaccurate or out-of-date credit information. If you think you lost the job opportunity because of a credit check error, you should contact Fair Credit right away.
Our knowledgeable attorneys can take a close look at your credit report or background check results, help you identify errors, and assist with filing dispute letters. If needed, we can even help you file a lawsuit against the at-fault party. Contact us today to get started and learn more.