The impact credit scores now have on those seeking out employment
Oh, how I hate the Catch-22 of higher education.
Picture this: You take out students loans to go to college so you can make more money. You damage your credit trying to make student loan payments. You don’t get a job because of your damaged credit; A job you can’t get without the degree and the debt that came with it.
While you may think this is an unlikely scenario, a recent survey by the National Financial Educators Council shows this is sadly a trend. It found that more than five percent of job hunters have been turned down from a position because of their financial situation.
Increasingly, more companies are checking out credit scores, debt, and past due bills before making a new hire; A process that left my sister Keila feeling uneasy when applying for her last job.
“They called me, and told me being hired was contingent on me paying [a storage bill that had gone through collections].” Keila said as we talked over FaceTime.
“I thought it was ridiculous honestly. I mean, it kind of made sense because it was a position at a credit union. But the position wasn’t for advising people on how to improve their credit. It’s to help them with online banking.”
She did get the job. But the same couldn’t be said for her roommate, Victoria, when Keila tried to refer her for a position there.
“She had a phone interview and would’ve had the face-to-face interview, but she wasn’t hired because of her student loans,” Keila told me. “She was paying the minimum, but they said that wasn’t enough, so…”
The survey also found that over a quarter (26.3 percent) of employees had employers who checked their financial background. That figure doesn’t even account for the 29.8 percent of respondents who weren’t sure if credit played a role in their employment.
And when asked if financial stability was a condition in the hiring and promotion process; over half (51.1 percent) of female respondents aged 45-54 said no. Only 38.4 percent of women aged 35-44 said the same.
This suggests that the practice is more popular among younger employees; raising the question of whether this will continue as more and more millennials enter the workforce. With Gen Y having the most student debt of any generation; this could prove to be problematic for landing a job and paying down debt.
“While certain aspects of my credit have improved, certain parts haven’t,” Keila says. “I’ve been paying my credit card bills on time, but I have one bill through collections because I believed I was charged unfairly and I’m trying to fight it. Even though I’m qualified, if I were to apply to another job that checked my credit right now, I don’t think I’d get hired.”
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Article last modified on February 12, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Employers Now Use Financial Background in the Hiring Process - AMP.