Creating a detailed resume can be the difference between you and other candidates when applying for a job. Customizing your cover letter only serves to increase your chances of getting the job. However, did you know that your credit score can impact your employment prospects?

Signs of bankruptcies and missed payments could indicate that you are irresponsible in other fields and give an edge to other candidates.

A survey by CareerBuilder found that up to 72% of employers rely on background checks when hiring employees, with about 29% checking credit reports. But do you know what a credit score is?

What is a Credit Score?

A credit score can be defined as a three-digit number that is used in determining your credit performance based on your credit history. It is more like a grade that is awarded to individuals depending on how they manage their financial matters. This might include utility bills, credit cards, and loans, among others.

This number is calculated using information derived from credit reports. In this report, you can find your financial history.

This history also includes your debt and how you pay or manage it. Credit score models use this information to calculate the three-digit number used to represent your credit score. The number ranges from 300 to 850.

So, how can credit scores impact your employment prospects and what are the signs of low credit to employers and recruiters?

Bad Financial Management and Irresponsibility

Every employer and recruiter will try as much as they can to look for employees who seem responsible. One way of finding out how responsible a person is is by checking their credit score to see how careful they are with their payments.

If you have a low credit score, then employers might associate you with irresponsibility and lack of the required finance skills. This is a red flag to almost every other employer and it might impact your employment prospects.

This means that if you want to get a job without interruptions, you should ensure that you have a high credit score. There are many ways of doing that, with one of the most important ones being making timely repayments and avoiding debts.

Bad Habits and Behaviors

It is important to note that during background checks, employers do not obtain your credit score. Instead, they get your credit report which is used to show your credit score. With a spending tracker such as SoFi, you can have a favorable credit report by tracking all your money, monitoring your credit score, financial insights, and spending breakdowns.

This is because employers will use your credit report to see if you possess bad habits and behaviors that they do not need in their company. For instance, having a lot of neglected credit cards might mean that you are an unorganized person.

Having many credit cards with high balances or even a lot of debt might show that you are a desperate person who will likely defraud the hiring company. This will hurt your employment prospects.

Employers Avoiding Legal Liability

Sometimes, employers might be avoiding the legal liability that comes with negligent hiring. This is very common with financial institutions such as banks that have to be compliant with many regulations that govern their operations.

In some countries, these financial institutions are supposed to conduct employment checks before hiring new employees. This includes credit checks on the new hires. If you are found to have a low credit score, you might end up missing out on the job.

For instance, in Singapore, financial institutions are required to satisfy their regulator that they have the required recruitment policies and control systems that ensure that their employees meet the set requirements.

Meeting Employers’ Expectations

Employers want to hire a person who will meet their expectations. This is a little bit more personal to employers who are looking for a person to handle any funds in the company or a person who will be tasked with managing any amount of funds.

This is because they do not want to have to deal with issues of misappropriation of funds with a new hire. Misappropriation of funds is an illegal activity and can happen at any level, even with top managers in an organization.

This has forced organizations to conduct credit checks every year even for their existing employees to ensure that such unfortunate illegal activities are avoided. A poor credit score will affect your job prospects in such a company.

How Can You Boost Your Credit Score?

You can boost your credit score in many ways. The first step to take is to ensure that you have paid your debt. In addition, you should pay off balances and lower the rate at which you use credit.

You can also boost your credit score by catching up on bills or accounts that might already be overdue. This ensures that there are no attempts of collection under your name that could hurt your credit score. Ensure that all overdue bills are paid.

Finally, ensure that you have set autopay for your monthly bills. This is because paying all bills on time is one of the best ways of improving your credit.

Where Will I Miss a Job Due to Poor Credit Score?

Well, as discussed above, some employers are very serious when it comes to their employees’ credit scores and credit history. These employers are keen to employ and keep staff members with good credit scores.

That notwithstanding, some states in the United States of America have prohibited employers from turning job applicants away due to poor credit scores. These states include Washington, Vermont, Oregon, Nevada, Maryland, Illinois, Hawaii, Delaware, Connecticut, Colorado, and California.

However, this does not affect all sectors in these states. For instance, if you are applying for a job in a financial institution in one of the states above, you will be denied an opportunity if you have a poor credit score. The remaining states allow employers to turn your application down if you have a poor score.

As you can see, it is important to ensure that you have a high credit score. If not, you might end up impacting your employment prospects negatively.