Human Resource Question? Credit check?

Question

What are the guidelines for too much debt to be considered for a job? The job that I'm going for says that a credit check is very important to the pre-employment process. I have 14,000 debit, however 12,000 of that are student loans. The bad part is that I have 3 things in collections. Do they really look at your things in collections the most or just your overall debt. Also I have no bankruptcies, liens, ect. I know they do not look at my credit score, and the things I have in collection makes up about 800 dollars. Should I tell them upfront about it or no? Thanks for your answers!

Answer 1

I think it depends on what kind of job you are going for.  We do background checks but we are looking for red flags like; what you said on your application vs the background check results, any criminal history-type, etc.  If the job you seek is one where you may be handling cash; they may look at that.  But for the most part, I think you are okay.  Background checks are mostly for validation and making sure they aren't hiring a criminal.

Answer 2

The guidelines or criteria differ based on the company's standards.  My company, for example, requires 80% good standing.  So if I had 5 accounts and 2 of them were negative (delinquent), I wouldn't pass or be eligible for hire.  

They don't care how much money you owe, it's the current standing of the accounts that generally matter for pre-employment purposes.  They're looking for negative accounts, not the amount of debt you have. With that said, it would be my best suggestion for you to ask the employer what their criteria is.  Their Human Resources team should be able to tell you what they require or consider acceptable.  And, like someone else mentioned, obtain a copy of your credit report so that you can see if you'd pass based off of the criteria they provided you with.

If you know for sure that this company will be conducting a credit check on you, they may not pass you if you have 3 items in collections. I reallllly wish you luck with this... it's so frustrating that companies are doing credit checks these days.

Answer 3

No you do not discuss your personal finances with an potential employer, they have nothing to do with whether you can perform the job or not.  Some places have you sign a release and it says they are going to do a background check which includes criminal and/or credit check.  Even though you sign this release they may not actually do a credit check, just the criminal check.  However, if they do perform a credit check there is no hold fast rules on what employers as a group would consider to be reason to not hire an applicant based on credit, meaning each company may have there own guidelines.  The theory or thought process behind running a credit check is a tool used to determine the applicants credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, in short if that employer believes you have bad credit you could be more likely to steal, if you can't manage your personal finances how can you handle their finances, not taking responsibility w/your finances equates to you possibly not being a responsible employee etc.  Banks are the largest employer that uses this, but because you have debt, mainly student loans and some bills in collections may not rule you out.  As an HR Manager I do not believe in credit checks to determine your ability to perform well on the job there are many things that can go into factor for why someone has bad credit, divorce, loss of employment, or just some bad personal choices on spending money - and we can't ask what happened, why is your credit bad we just have to assume based on the information we see that you could be a poor choice.  While some statistics supports this theory, in general I don't believe people w/poor credit are unworthy of employment, maybe some jobs wouldn't be right for you, but as a whole I see poor credit, or high debt as you really need a job. Myself personally I wouldn't want to work for an employer digging around in my personal finances, and I have great credit- everyone in the world has or will have something go to collections, doesn't mean you can't perform well on the job, life happens and sometimes there are things we can't do but work and pay off the debt. Though this is a long winded answer, your credit check may prove nothing to them, or they may look at you as high risk candidate and rule you out.  Either way, there is no rules all employers have to follow as to what is considered bad, yes they have to follow certain guidelines (FCRA), but most employers will tell you that you weren't selected based on them finding another more qualified candidate rather than worry about legal issues for not hiring you based on credit alone. Should they determine not to hire based solely or partly on credit that have to release that information to you, whom they got it from.  Long answer short, there is no one answer to answer your question, you just have to see how it pan's out, but don't offer any information prior to them running the check.

HR Manager

Answer 4

You'll be FINE.  Most people have SOME sort of debt (credit card, etc), however they don't consider educational loans a debt unless you have not been paying on them after you have been out of school and have been asked to start making payments by your loan company.

How else are you going to get a job?!  lol.  

Answer 5

They are mainly concerned about what makes up your score. If there are a lot of debt collection cases filed against you, or a history of not paying debts on time - or at all - they will pass you by. Almost half of your non-student-loan debt is in collection, and you do not say if your student loan payments are in arrears and by how long.

Get your own copy of your credit reports (www.annualcreditreports.com) and you will have a better idea. One free every year.