Can bad credit hurt your job search?

Millions of Americans have likely learned the hard way over the past few years that bad or limited credit histories can make it very difficult to establish a strong financial base. This is true for a large number of reasons, but perhaps the one of the least-discussed of these is the fact that having bad, little, or no past experience with credit can actually make it difficult to get a job.

Studies show that the majority of companies tend to examine people's credit histories when they apply for jobs, and not only make hiring decisions based upon this data, but also will often use them to immediately disqualify those with low ratings or who are considered "unscoreable" by traditional credit rating metrics. Many consumer advocates and experts say that this is unfair, and that a good credit rating has little to do with whether a person is qualified for many positions - i.e. those not associated with managing finances - or is any sort of sign of trustworthiness. However, the fact is that only a small number of states nationwide outlaw the use of credit data in hiring.

What does this mean for job seekers?
The unfortunate issue here is that when it comes to a bad credit rating, there may not be much that consumers can do to improve their situations through traditional means. This is especially true of those who are among the 40 million or so "slim profile" Americans who have minimal or no credit history, because there may not be much opportunity for them to get started in this area, particularly when they're simultaneously looking for a job.

And this can also create a vicious cycle of people not being able to improve their financial standings because they don't have good-paying jobs, and not being able to get good-paying jobs because they don't have solid financial standings.

What can they do?
Fortunately, those looking to quickly and easily demonstrate a positive payment history, even when they don't have credit, can often rely upon the benefits of an alternative credit score. These ratings - which include those from PRBC - take into account not just payment history on credit (when available), but also on other types of monthly payments. That can include things like rent, utilities, cellphone bills, cable bills, and so on.

That, in turn, will demonstrate to any company that uses credit data that certain people can handle their finances, even if they have little or no access to credit. As long as they have a strong payment history on those accounts, their alternative scores will be in good shape.

This comes with another benefit as well: Consumers can self-report this alternative credit data, meaning that they have significant agency in improving their finances. Finally, it's also important for these people to know that if they present any company with alternative credit data in lieu of traditional scoring methods, that company must consider it as they would any other payment data, by law.