Editorial Policy

Clean up credit report glitches before job hunting

Erica Sandberg

February 16, 2016

QHi Erica,

I’ve been trying to land a job at a bank, and they refused to interview me. I don’t know the exact reason, but I do know that, like all banks, they do credit checks. If a hiring manager refuses to hire me because I owe back student loans, couldn’t I file a lawsuit against the hiring manager (or the bank) for discrimination?

Because I owe back student loans, and because I don’t have a job, let alone not have a job that pays enough money like big companies do, I don’t have money at this time to pay back my loans. And I feel that the behavior on the bank’s part was not appropriate, not to hire me because of this reason, and not even let me explain my situation to the manager. I look forward to hearing what you have to say. — Derrick

ADear Derrick,

I’m sorry that you’re having a tough time getting hired by this particular bank. It’s true that hiring managers in some states can ask to view a prospective employee’s credit reports. In fact, it’s sensible due diligence for some employers, especially where money is involved. Presuming the position requires any level of financial responsibility or would provide you with access to the erica-box4security system, the company would be wise to learn more about you.

What is interesting, though, is that you haven’t even reached the interview stage yet. An employer would not be able to access your credit report without your authorization, and that usually takes place after meeting with you. If you never signed a document stating that you are giving them permission to pull your report, they haven’t seen it and did not pass judgment on you based on the data it contains.

This is both good and bad news for you. Good, because you weren’t turned down because of those student loans, but bad since you were passed over for some other reason.  Most likely it’s because you didn’t meet the basic qualifications. It’s possible another candidate was a better fit, or the bank decided not to hire anyone after all.

On the other hand, if you did allow the bank to pull your credit report, the hiring manager does have the right to deny you the position based on what is listed. That would not be illegal discrimination, but the act of being discriminating — which is legal. The fact is, if your report indicates delinquent accounts, defaults, collection agency activity, or that you simply owe a huge amount of money, you might be perceived as irresponsible and hiring you would pose too great of a risk to the company.

Although the hiring manager did not volunteer the reason for the rejection, you can try to find out. Call or email the contact, and thank the manager for considering you for the position. Ask the manager to please provide you with the reasons for the rejection. You may hear nothing back, but it’s possible you’ll get a response and an explanation.

In the meantime, you have some options. Not all employers check credit reports, but since many do, clean up your credit file. If your student loan is not yet in default, contact the lender and request a deferment or forbearance. This will keep the account in good standing but you won’t have to make payments for a specific time frame. It will also take pressure off you during your job search. If your student loan is already in default, that won’t be lifted  until you start to pay. You can, however, add a 100-word statement to your credit file, which is your opportunity to explain why the loan went bad. When a company or employer accesses your report, the hiring manager will see the statement and may be understanding about your situation.

When you do score an interview, try to relax. That means they’re interested in you! And if you are asked for your report, even better — they just want to make sure you’re the right person for the job.

Some hiring managers conduct only a cursory credit report review, and if nothing seems wrong or strange, you’re on to the next stage of the hiring process. Still, it’s a smart idea to provide them with a preview. A succinct “I’d like you to know now that I do have delinquent student loan debt that I’m taking care of, and in no way does it represent my character. I am happy to provide recommendations from others (for example, a landlord who will vouch for your on-time payments) that prove my financial aptitude” should suffice.

With perseverance you’ll get a job and can gain control over those looming student loans!

Got a question for Erica? Send her an email.

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