Can a bad credit rating stop me getting a job?

Job interview note in a diary - Can a bad credit rating stop me getting a job?

Sometimes, the way you've handled your finances in the past will be used to help people decide how you'll handle things in the future. This can happen when you apply for a loan, a bank account - or a job.

It might seem unfair that a potential employer could turn you down because of your credit history, but in many ways it's nothing new. Most people who know a bit about bankruptcy will know that it limits your future job prospects, meaning you won't be able to work as a company director, for example, or a local government councillor.

When it comes to IVAs (Individual Voluntary Arrangements), there aren't any universal rules about this, but some companies won't employ someone with an IVA on their credit record.

If you'd like to learn more about credit ratings and how you could improve yours, click here.

Credit checks & jobs - latest news

This week, an article in The Independent tells us that more employers are using credit checks when they're considering job applications. So your credit history could be a factor even if you've never been declared bankrupt or entered an IVA.

Citing credit reference agency Callcredit, the article states that 'In the past, credit checks have been the preserve of government or the financial services sector but, with concerns rising over internal fraud, others are investigating potential workers' financial history.'

Callcredit's Owen Roberts commented that: "Missed payments, regularly applying for further credit, being issued with a County Court Judgment or even being declared bankrupt, are all indicators that the candidate could be financially overstretched."

Improving your credit rating

Whether it's your job application you're worried about or your chances of borrowing money or opening a bank account, there are ways to improve your credit rating.

Looking back at the past, you might be able to improve things...

  • Look at your credit report and you might find there are actual mistakes on there. If so, you have the right to have them changed, so your credit report doesn't paint an inaccurate picture of you.
  • You can add a note of explanation to explain some of the stuff on your report. For example, you might have missed a few payments because you were ill and off work for a while. Adding a note will help your prospective employer / bank / lender understand why, so they can take this into account when they're making a decision.

When it comes to your behaviour from now on, there are some steps you could take to try and make sure your credit report looks better in the future than it does in the present.

  • Open a bank account. Simply having an account can help improve your credit rating. If you think you're in a Catch-22 situation because you can't open a bank account, don't forget about basic bank accounts, which don't require a credit check.
  • Make sure you're on the Electoral Roll, as this is used to confirm your name and address.
  • Don't apply for credit too often. This can make it look like you're desperate for money and / or that nobody wants to lend you money.
  • Try to make sure you pay every bill on time. This will help improve your credit rating, by showing you're handling your finances well these days.

Image iStockPhotos / Nigel Carse

Tags: loans, banking, credit cards, bills, credit rating, employment, unemployment, bad credit, credit score, credit, credit problems, bad credit rating, get a job, job application, job interview

Fees payable when continuing service is provided. Repaying debt over a longer period may increase the total amount to be repaid. Calls are recorded and are usually free from UK landlines. Mobile phone users may be charged and should check with their service provider. Cards are provided by third parties and are subject to eligibility, status and terms and conditions. Applicants must be UK residents aged 18 or over.

All About Money Limited © 2013. All rights reserved. 42 Boston Rd, Sleaford, Lincolnshire NG34 7ER.