When midlife career switchers ask me for advice on how to succeed, I say, “get a fitness program.”
You need to be:
- Physically fit– provides the strength and mental sharpness to deal with stress, especially when changing jobs, or making big decisions. It sounds superficial, but an in-shape and energetic appearance is a bonus in the work world for those in “late youth,” as Anne Lamott calls the boomer stage of life.
- Spiritually fit –mind-body balance helps you calmly roll with the punches, and teaches you to quietly listen to the inner voice that can guide your decisions.
- Financially fit– gives you the freedom of choice. It provides the nimbleness you need to start a new career, open your own business, pay the tuition to go back to school, add skills, and much more.
To be honest, this three-step fitness regime is good for most things in life. The financial step is probably the hardest. But here’s what I know. It’s not an option.
It’s there–warts and all–in your credit report and score. Lenders look at it all the time. A bad score can pack a wallop to your wallet–higher interest loans, bumped up insurance rates, and even steeper monthly rents are charged if your credit looks shaky.
But here’s the really bad news I have for you. Bad credit can cost you a job. If you’re looking to change careers, find a new job, get promoted, or just hang onto the one you have, a messy credit report can trip you up.
“Credit checks have become routine among employers,” writes personal finance expert LizWestonin the new edition of her classic book, Your Credit Score: How to Improve the 3-Digit Number That Shapes Your Financial Future. The problem with this is that there is absolutely no research supporting a connection between bad credit and job performance, she writes.
That got my attention. Six out of ten private employers check the credit histories of at least some of their job applicants, and 13 percent conduct them on all candidates, according to a survey by the Society for Human Resource Management.
Why? Presumably to prevent theft or embezzlement, fear of lawsuits for a hiring mistake if their employees do something wrong, or to get a sense of the overall dependability of a job candidate.
In general, employers conduct these checks for job seekers applying for positions with financial responsibility, for senior executive positions, and for those positions with access to highly confidential employee information, according to the report.
This trend span across all industries—they’re not exclusive to financial institutions. Some experts say that credit checks are now regularly being done on HR and health-care professional who have access to personal information — Social Security numbers, birth dates, and addresses — that could be misused to steal someone’s identity. A person in IT at on-line shopping company might also be screened, because they would have access to customer credit-card numbers.
Weston didn’t write about employers use of credit checks in previous editions, but there is “mounting evidence that employers are abusing credit checks,” she writes. They are “sometimes even violating federal law when they do so, and you need to know about the risks you face when you’re trying to get a job,” she concluded.
States are taking legal action. The good news is that a handful of states–Washington, Oregon, Hawaii, Illinois, Maryland and Connecticut–have cracked down on the practice. The most recent to do so is California.
Effective January 1, 2012, a California employer cannot review a credit report for hiring or decisions to continue employment of current employees. Exceptions: if the job is with the state Department of Justice, management positions, law enforcement jobs, and jobs that entail access to money, financial accounts, or personal information. (There are other caveats, too.)
Yes, you read that right. Those of you already employed aren’t safe from credit checks either. Some employers regularly check credit reports when firing, promoting, or determining compensation for workers. That’s especially true, if you work for the federal government or a company that does consulting work for a government agency, which often requires good credit for various security clearances.
You won’t be surprised by it. The Federal Fair Credit Reporting Act requires employers to get your written permission to conduct the check. If you’re interviewing for a job, the request is often disclosed in your offer letter, but you may be asked to agree to the check before an offer is made. You can say no, but in truth, you don’t have much choice if you want the job, or want to keep one.
Don’t sweat the small stuff. Most employers will ignore the little slips, one-time, or short-term blips. Even foreclosures, tax liens, education-related debt and medical debt don’t play a major role in the decision to not hire a job candidate, according to the report. The top two reasons an organization would not extend a job offer are: current outstanding judgments (meaning you have not paid a debt that a creditor has the legal right to collect) and accounts in debt collection.
If your credit history was dinged by a divorce, unexpected medical expenses, or identity theft, be ready to explain it. Companies are usually willing to give you that chance to make your case and defend your good character.
When an employer says the credit check cost you a job offer, a promotion, or was the reason you were fired, you’re entitled to see the report, and they must tell you how to get a copy from the consumer reporting company. There’s no charge for the report if you request it within 60 days, and you have the right to dispute the accuracy.
That said, my guess is that most employers aren’t going to tell you that it was the credit report that did it. It’s easier to find another excuse, or not give one at all.
What can you do before they pull your report?
- Check for mistakes on your credit report annually. Visit www.annualcreditreport.com to request a free credit report from the three major consumer credit reporting agencies–Experian, Equifax and TransUnion. Clean up anything that’s wrong or looks questionable. This can take a little time.
- Boost your credit score. To get your score up, don’t open new accounts, transfer balances or close accounts, saysCredit.com’s personal finance expert, Gerri Detweiller. Closing accounts sounds like a good idea, but in reality, it lowers your available credit and pushes your current ratio of debt higher. Pay off high-interest credit cards, if possible. Pay your bills on time. All it takes is one late payment to crush your score.
And set aside time to take your dog for a long, heart-healthy walk. It will clear your mind and give you a dose of inner peace– free of charge.