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Another Reason to Work on That Credit Score…

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Despite Dave Ramsey recommendations, I’m focused on my credit score and I try to encourage you to stay on top of yours as well. I’ve had the same credit card for 11 years (always carried a balance until last month) and I pay my mortgage on time – even if that means not eating… or selling something.

Sure, if I had no debt and had no plans or acquiring new debt, my credit score wouldn’t matter…

Or would it?

I was reading Parade magazine this week and was reminded of a very important reason to keep up those scores – employment. Employers are using credit scores as another way to narrow down candidates. In this rough job market, that’s the last thing you want to worry about.

My current employer ran a credit check on me prior to offering employment. I had been unemployed for 2 months but had managed to pay my bills. Had my credit score fallen, I likely would have been passed over.

Congress is considering blocking this practice but right now, it’s very legal.

Do you think credit checks are a fair way to judge potential employees?

You can read the article at Parade.com/creditscore


10 Comments

  • Reply Jen |

    I read somewhere that your credit score is also used by insurance companies to set your premium. If true, then that’s another reason maintain a good credit score – so you don’t get hit with higher car insurance and homeowner’s premiums.

  • Reply Matt |

    Yes Jen,

    Insurance companies do use your credit score. I know people who have been turned down for life insurance based on credit.

    Now… until research is done that can prove that people with lower credit scores “steal” money from companies more than those with high credit scores, then I don’t think that it is correct for jobs to go that route. But… that’s the way it is.

  • Reply Mary Taylor |

    I do not believe that companies should use credit score in regard to employment. There are many other factors besides theft that cause a credit score to slip.

    Several years ago we our daughter was hospitalized for 3 days for a tumor on her thyroid. We had insurance but my husband company closed all offices in our state the day before her surgery. We assumed our insurance was in effect for 30 days as he had insurance deductions taken our of his check.

    4 weeks after the surgery the bills started coming in stating patient was not covered during the time of surgery. I called and his company had stated his date of termination as the 30th of the month before, so no insurance for the next month. But wait the surgery was the 4th of the month, he was let go on the 3rd but they reported to the insurance company he left of the 30th, 3 days before. We fought with them and the insurance company but since the company did not send in the insurance premium then we did no have coverage.

    With no job we tried to pay our bills on time, some were more than 30 days late but paid. As a result our credit score took a hit. I was turned down at a major retailer not because I didn’t have experience but because my credit score needed to be above 550 and it was not.

    So no I don’t think credit score should be a factor in employment. I want to pay my bills but am having a tough time with my credit score finding employment.

  • Reply CJM |

    SO…what’s your plan then? I mean this entire blog is all about getting rid of debt…if you do that you’ll have a low or no credit score. Seems your plan is flawed. You want to get rid of debt, but yet want to keep up your credit score so you’ll please all these business that “require” it.

    You need a better plan. My advice…don’t do business with these companies that require a FICO score for you to use their services. Simple as that. It’s dumb. If the only way you can get employment and insurance is to borrow money, I don’t want to have anything to do with that game they’re playing. Do business elsewhere with a company that has their brain plugged in.

  • Reply John |

    Employers are checking credit reports during background checks. Also, credit scores are being checked for everything these days. Just more fuel to add to the fire of the have and have nots. I’ve seen credit scores of 666 several times and have wondered, “Is that the mark of the beast…A credit score?” I have mixed emotions on it when it comes to employment. On one hand employers could be passing on a talented, hard working employee, who had a rough patch for a while. Maybe job loss caused the problem in the first place. And maybe a new job with a better salary is just what they need to get back on their feet. On the other hand they could be avoiding the drama of having a stressed out employee who gets calls from collection agencies all the time. It’s tough to pick sides on that one.

  • Reply Peg |

    I DO NOT THINK AN EMPLOYER SHOULD JUDGE A CREDIT SCORE, WHATSOEVER, IF THE PERSON HAS THE WORK CAPABILITY, CLEAN WORK RECORD, ETC. FOR THE PURPOSE OF HIRING IN MOST CASES. IF A PERSON HAS A GREAT CREDIT SCORE, BUT WAS CAUGHT FOR SHOPLIFTING OR STEALING FROM A PREVIOUS EMPLOYER, AND THE CASE/INCIDENT WAS SETTLED AND NEVER WENT TO COURT – WHAT THEN? I’M SURE THEY’RE GONNA KEEP THAT GREAT CREDIT SCORE IT THEY STEAL FROM ANOTHER EMPLOYER TO HELP PAY EXTRA ON THEIR BILLS, OTHER THAN THEIR PAYCHECK! THIS CREDIT SCORE ISSUE IS JUST TAKEN TOO FAR. PEOPLE LOSE THEIR JOBS, STRESS IS AT AN ALL TIME HIGH – EXCEPT FOR ALL THE OVER-PAID, SNOOTY PEOPLE WHO LOOK DOWN ON THE REST OF US – I’M SICK OF IT!

  • Reply Mary |

    I think credit “scores” should be outlawed. Your credit score is only high if you are USING credit…credit cards, loans, etc. What if you are someone who only uses CASH and SAVES UP AHEAD of buying a large purchase? I worked out of the country for a year and made a huge salary. I would pay off a $10k credit card bill every month because of plane fare, rental car, $200/night hotel bills, etc. I had a great credit score but it really was none of my own doing – just that our company required that we use our own card rather than a corporate card.

    A co-worker managed to save thousands and paid cash for a car when he got home. Rather than take out a loan, he had a car free and clear and no benefit to his score because of it.

    I was laid off a year after that (went from $130k/yr to about $12k) and ran up my cards again in order to survive. It got so bad I stopped making payments of any kind and my score dropped to 619 at last check.

    It’s JUST A NUMBER. If you get turned down for a loan, passed over for a job, or whatever…it’s their loss and you need to just keep looking.

    As an example of the stupid circular reasoning so prevalent in this country – and so downright WRONG – I applied to JC Penney catalog recent as a temp Christmas worker. I did that job for 3 years with an excellent record back in the mid- nineties. I had to take some online personality test in order to apply and at the end of the test I was told that I was “not the type of person they were looking for”. WTF? I did the job for 3 years, was in customer service, had excellent selling rate for their catalogs in the telemarketing division…and I am not what they are looking for?

    THEIR LOSS.

    Like my cousin said recently (they’ve both lost jobs, a small business, and their home) “I am not defined by a number or a credit report”. EXACTLY.

  • Reply Nicole |

    Very interesting and good to now! Thankfully my credit score is in the high 700’s but according to Reader’s Digest even one missed payment can drop your score by 100 points. Just when you thought you were safe, huh?

  • Reply Beks |

    I agree. Credit scores these days aren’t a sign as to who you are. This economy has hurt almost everyone and this practice should be stopped.

  • Reply Mary |

    Exactly – nearly everyone I know (I live in Michigan, 20% unemployment in my area right now) has at least 1 family member unemployed. And, more jobs are going – there hasn’t been any “improvement” here because of all this money the government is tossing around. In fact, the stimulus money has been used to re-do a highway overpass on the way to my small business. It’s been the death knell for my shop…business was off 60% from last year when comparing the month of September. That spells the closing for my small business. So, the overpass put a few people to work with the rebuilding but it’s killed at least 5 small businesses within 2 blocks of my shop. Thank you, Governor Granholm and President Obama, you’ve sure helped me…(she says sarcastically…) so I’m closing my children’s consignment shop on Oct. 31.

    I can’t take the stress of not having income, not paying bills, waiting for the bank to take whatever is left. For five years I’ve worked to build a small business, working full time as an engineer at the same time, and in the past five months it’s just fallen apart.

    I’ll rebuild – it will take time but I’ll go back to engineering full time, most likely in another state. I’ll repay everything I own eventually but my life will surely be different in the future. I pay cash for everything now (mostly earned by selling my stuff on ebay and craigslist) and I will NEVER open another credit card as long as I live. So, I plan to never worry about my credit score again. If I ever buy another house, it will be for cash up front (ala moneysavingmom), same for a car, etc.

    Thanks for letting me vent. This economy sucks. Some of my decisions haven’t been all that great, either, so I take responsibility for my situation, definitely, but why did the govt throw billions at big banks that employed a few rather than creating jobs for millions???

So, what do you think ?