Hey everyone! Today I have a post for you by Gina from The Frugal Convert. Until Gina emailed me, I wasn't even aware that your past finances could keep you from getting a job that you wanted! According to a survey by Nerd Wallet, 25% of Human Resources use credit or financial checks while hiring for some positions.
Gina is sharing her story of getting fired for her credit, as well as how she managed to get back on track. Enjoy! ~M$M
Just out of college, I got my first temp job at a large financial company. It was less than a 5-minute commute from my home and basically the perfect scenario.
I was 23 at the time and I was so excited for the prospect of being hired permanently after my 6-month probationary period. I worked so hard and did everything that was expected of me and more.
Working as a Commitment Specialist, I helped realtors lock in their client loans for home buying. It was not exactly what I wanted to do with my career, but it was a step towards the right direction. At that time, I really had my eye on being a Loan Analyst in the future.
As a Loan Analyst, I would have the awesome job of playing detective. I'd find the errors preventing some of the loans from being completed in the system. This is the kind of job that was given to people who worked really hard and proved themselves over time.
To make my dream a reality, I worked extremely hard for 6 months. I showed up on time, never came late from lunch, recorded all of my calls on notes, and didn’t talk during work hours. If there was something I could do to impress my boss, I did it.
And my hard work paid off…or so I thought
After 6 months, I was actually approached by my company for a promotion. This promotion was for my dream job and it would pay me $2 more per hour. At that time, it was a lot of money for me. I was a newlywed with a 3-year-old at home.
Every penny counted back then.
During the promotion process, they did a background check, which is pretty standard. What I didn’t know was that they also did a credit check.
I was fired 2 days later
The agency I was working with called and said the company no longer needed my services. When I asked why, they said that my credit check did not meet their standards. But, I didn't initially give up.
I directly contacted my supervisor at the company to see if there was anything I can do for a second chance.
She suggested that I write a letter to the Associate VP, explaining my credit report and why that wouldn't affect my work ethic with the company.
But, at that point, all the explanation in the world would fall on deaf ears. Their impression of me was tarnished and there wasn't a way to salvage it.
My credit directly reflected my character as a person, and because it was really low, it meant that I was incapable of being trusted with money.
My credit at the time was less than 550. At 19, the beginning of my debt journey, I racked up almost $10,000 in debt that I wasn't actively paying back. As a college student, I was working at a local bank and made less than $1,000 per month working part-time.
The money I earned was spent on eating out with my friends, buying clothes, and paying for my newly financed car. I was so bad with my money, that I almost lost my car due to frequent late payments.
To make matters worse – I eventually left the job to focus on school, not thinking about how I’d pay back my debt. Needless to say, the bills started rolling in month after month. Harassment calls started and didn’t stop. I was so stressed out, and I had no way to alleviate the stress. I was still in school at the time and NEEDED to finish so that I could have a fighting chance.
Read also: How to Fix Your Credit Score Quickly
Being a teenager and not knowing how to manage money is quite the disaster.
As a 1st-year college student, credit cards are thrown at you. Student loans are given out like Halloween candy. No one ever taught me what debt really meant or why it was dumb. All I ever knew was that I was qualified to get some money, and I took the opportunity.
Once I realized what was happening, I panicked. I had no real plan or idea of how to get myself out of debt. All I knew was that working would help me pay it off.
When I married my husband, I learned a lot about money management and debt
He was not only an accountant by trade, but he truly loved to manage money, and thankfully he managed ours well. He started slowly paying off my debt, but the repayments couldn't erase my bad choices fast enough.
It definitely wasn’t going to be a quick fix to increase my credit score.
That's why I really wanted to get that promotion. My dream job was going to help me pay off my debt faster, but the dream job stayed a dream. Unfortunately, my bad credit snatched the opportunity from my hands, and I never even had a chance to explain myself to my boss.
It was over.
If you’ve been in this predicament, know you are not alone.
This happened to me more than 10 years ago and I’m here to tell you, there is a way out. It’s a long way and there are no shortcuts, but its the best and simplest way to get out of debt.
Related: How To Stay Motivated While Paying Off Debt
First, stop accumulating more debt.
Accumulating more debt while you're paying off debt makes no sense. Imagine digging a bigger hole while you're trying to climb out of it. You're sabotaging yourself and you'll never get ahead enough to break the cycle. You just can't do that.
Next, make a budget and stick to it
This is crucial to get your finances in order. You need to know where you're money is going so you know how much you can pay towards your debt.
If you can take on a second job, do it, even if it’s just for a few months. Take that money and start making a larger payment to pay off your debt faster.
Finally, don’t ignore your debt like I did
Funny enough, I thought if I stopped answering the mean callers, they’d eventually go away. They didn’t and neither did my score. They both haunted me for years.
Attack your debt before it starts to attack you and your dreams. Kill it with payment after payment and check your credit score from time to time. Your career, your salary, and your livelihood may depend on it.
I hope that my story gives you some perspective on how debilitating debt could be. Your credit score makes more than just a difference in what you can purchase.
It can make the difference between the opportunities that are offered to you in life.
Question for you:
How is debt keeping you from achieving your dream?
Oof, ouch – that’s really rough. I don’t think many people realize that some employers will do a credit check, and I’d imagine it’s even more common in the financial industry.
We’re all young and some of us don’t make the best decisions at that stage of our lives.
Have you ever thought about trying to go back to that career path now that it’s in the past?
Yeah, I wish I’d been taught in school about money and credit, maybe the next generation would have do better if they were taught early on.
Actually, I ended up with a great career at a great organization, so everything happens for a reason, I guess! 🙂
This happened to me, too. I wasn’t fired two days later, but I “had” a job, until the credit report. I don’t know what my number was, but I know it was bad. I was broke. I had missed payments. At one point my student loan lender called my grandma looking for me because I wasn’t making my payments.
I remember thinking, “I need the job so I can earn more money and CAN pay my bills.” Eventually I got another job (plus a second, part time job) and paid everything off, but I’ve never forgotten that lesson.
Your story almost mirrors mine! Yeah, it’s almost a Catch22, you need the job to pay the debt, but you lose the job because of the debt, haha. Luckily you found another income source to get you back on track too!
That is definitely a wake-up call, and I am sorry you had to go through it…
I have always found it strange why personal finance isn’t taught to us in high school. At 18 we either go to college, or begin working in the real world. Both of those decisions have to deal with money. College requires you to pay for it, and working gives money back to you. In both of those cases, neither the college student nor the worker fully understands how to handle that money at the time (unless they were taught by family).
I also know how intense the credit check can be. Working in Washington D.C., most jobs require a government security clearance, and they definitely dive DEEP into your credit history.
Thanks for the honest share!
I totally agree! I’m a huge believer that money matters need to be taught to kids before they finish high school so they have a fighting chance.
I’d imagine it is stressful trying to apply for jobs in D.C. in that case. 🙂
I also work for a company related to a financial institution. We are offered benefits as account perks (waived fees, etc.) but it is in the terms that if those accounts have any negative activities (overdrafts, exceeding transaction limits, etc) that it can be noted in our personnel file, benefits revoked, and your direct report will get notices which can be used in performance reviews. Banks don’t play around because the fiduciary liability for one account can be severe too easily. Our company even has the position now that it’s branding can’t even be used on any social sites other than linkedin. The whole work and personal life separate idiom is fading away.
I agree, it is fading away, sadly without us paying attention to it. That’s crazy that they monitor your personal accounts like that, but I guess you know what you’re getting into when you work for financial institutions. Do they tell you that the status of your account could be used against you?
Reminds me of the time that I found out a college friend would be working at the same place I was. I saw him after his interview and everything. Fast forward a few days and all of a sudden it wasn’t happening. The reason: His credit report.
Until then, I knew credit was sort of important, but that was the first time I realized exactly how much impact it truly had.
Thanks for sharing! I’ve heard so many say that they didn’t know that credit could harm their career, and I only know because I learned the hard way. But, I feel like there should be an easier way to learn BEFORE their career is affected, right? haha. Thanks for your comment!
Yes, companies do that specifically financial institutions. I remember about 6 or 7 years ago, my sister recommended a family friend to work at a bank where she works. My sister at that time was VP of loans operations and our friend just got laid off from her job. She was very excited thinking that she’s almost guaranteed the job based on her experienced and recommendation. Not so fast. The interview went very well but two days later after the bank ran a credit check on her, she was told that her credit report did not meet the banks hiring policies.
In your case, they should have not even hired or let you start until they’re done with checking your credit.
Thanks for your comment! Wow, that’s tough to think you have the job and then poof, it’s gone! For me, I was working through an agency and it was temporary for 6 months. But when the company wanted to hire me on permanently and give me a promotion, that’s when it all went downhill. haha.
This. “Student loans are given out like Halloween candy.” I absolutely resonate with this. I love what I do, but if there was a cheaper route to get there or a cheaper just as fulfilling route, I would have done it. There is little talk about actual salary needs to live + pay down student loans. I make sure to have frank conversations with the high school/future college students in my life, despite their weird looks from my questions. I absolutely agree financial education should be taught in high school as well as other educational options like a technical school or apprenticeship program . College was pushed so hard, I don’t think students knew there was other options that give them a good paying job without so much debt.
Thanks for your comment, so glad you agree! I hope that a change is made in schools soon. There would be much less debt if people had more information and options. 🙂
Wow, I knew that credit scores were important but never knew they could be used to deny employment/fire someone like this. Thanks for sharing your experience to help educate others!
So glad I could help! Yeah, unfortunately they can if you will have any financial responsibilities in their company.
But, the good new is that if you’re proactive with paying off your debt, you should be fine. 🙂
I’m ashamed that I had no idea before your article that this is even a thing in this country. It seems exactly the opposite of the societal values we should reinforce. When someone is doing well and working, we should allow companies to terminate them based on credit, putting them in a position where it is more difficult to support themselves and they may need more assistance. What an awful cycle. Kudos to you for pulling your life around and rocking your finances.
Thanks so much for your comment! I totally agree with you, society shouldn’t judge a person based on their credit but more in their work ethic. But now that we know, we can do better! 😁
Sorry that happened to you Gina but it sounds like in the end it was a great learning experience that will really pay dividends for you for the rest of your life. The hardest lessons are sometimes the best.
Thanks! Yeah, I learned this lesson the hard way, but I’m definitely better and wise for it. Glad I could help others be educated by my experience! 🙂
Thanks, I’m glad I could help others be wiser with my experience! 🙂
Wow, I’ve honestly heard this was a possibility, but never heard directly of a real story like yours (part of me thought it was an urban legend). I’m a bit concerned as my credit score right now is abysmal – down to 650 last I checked. However, this is not due to anything I’ve done wrong, and in fact quite the opposite. We’ve paid off all our debts, with no open lines of credit and no plans to get any. We’re stockpiling money and hope to never borrow again. However – I am working full-time and I would hate to be turned down for a new job or promotion due to my bad credit. Disappointing that the major credit bureaus have this kind of power! I would really argue with the statement “My credit directly reflected my character as a person” because my low score means I am very wealthy with no debt…
Thanks for your comment! Yeah, unfortunately it is a reality and it was a rude awakening for me. In your case, I doubt that it would affect you the way it did for me, since you can justify in a positive way that your score went down because you stopped borrowing money and became debt-free. For me, I was far away from being debt-free and had been delinquent in my payments in the past. Also, you have a great point about credit scores not accurately reflecting someone’s true character, totally agree!!