How to explain bad credit to potential employer

bad credit job seeking tips

If you are asked about your bad credit from a potential employer, you should be brief and focus on your strategy to move forward. 

Finding an ideal job is probably one of your most important life goals. Perhaps the first thing that comes to mind when thinking about the ideal job is not hating Monday mornings and going to your office with a smile. If you love what you do, there’s no task you’ll consider impossible. And you’ve likely heard of the saying: Find a job you love and you’ll never work a day in your life.

But finding an ideal job may not always be the easiest thing to do. Almost everyone experiences a couple of failures before they find a place where they fit in. 

This journey toward a great job or career may take a while, especially if you have bad credit. It usually goes like this: you apply for a job, they like your resume, but then your potential employer looks into your financial history and decides you’re not a good candidate. Just like that, based on your past financial issues, their opinion changes. And this is just one of the many costs of bad credit!

This scenario doesn’t necessarily happen in every case. Some employers are willing to give you a chance regardless of your bad credit. Even if they’re not, there are a number of things you can do so that bad credit doesn’t come between you and your ideal job. 

You can have a five-star resume and tons of experience but still be denied a job. If you’re left in total confusion after receiving a phone call or an email where you’ve been turned down even though you thought you nailed the interview, the employer might have checked your credit report and not liked what they found.

Did you know that one in seven candidates who participated in a survey have explicitly been told that they wouldn’t get the job due to their poor credit?1

Getting turned down because of your bad credit actually creates a vicious cycle that’s hard to break. You need a steady job and regular income to improve your credit score. However, your poor credit is what’s stopping you from getting a decent job. 

Your bad credit score may not even be your fault. Sometimes bad credit is the result of a medical emergency that costs you a lot and your insurance can’t or won’t cover the bills. A family member may lose their job and they are forced to go months without a new employment despite a dedicated job search. In those situations, bad credit can be the result if you cannot keep up with your ongoing financial obligations. 

So, what kind of information does an employer look for in your credit report and why do they sometimes turn down candidates just because of their bad credit?

Asking for the credit report has become a regular part of the hiring process nowadays. Somewhere between going through your resume for the first time and informing you about their final decision, your prospective employer will probably run a credit check. This information tells the employer about how responsible you are with your debt. Thankfully, this check is a “soft inquiry” that does not harm your credit score or make your credit score situation even worse.

How to Minimize the Damage and Get Your Dream Job

Luckily, there are a number of things you can do to prevent your financial history from getting in the way of building your career, or at least getting a decent job that will help you get through a tough period. The worst thing you can do is actually to do nothing and wait for the situation to resolve itself. Being proactive can help you more than you might think.

Check Your Report Before Your Employer Does

It’s better to be prepared for a job-seeking journey than to allow yourself to be taken by surprise, usually an unpleasant one. If you check your credit on a regular basis, you can avoid this kind of surprise and be well-prepared before you even reach your first interview.

You are entitled to a free credit report once a year. However, some situations allow you to get one more often, for example:

  1. There was a mistake in your credit report.
  2. You are unemployed, and you’re planning to seek employment within 60 days.
  3. You applied for a loan (personal loan options, cash advance loans, payday loans, etc.) and the lender rejected your application.
  4. You’re currently living on welfare.
  5. Your identity was stolen.

It’s highly recommended that you check your own report before you start searching for a job because at least you’ll know where you stand. Being unprepared can cost you a lot, especially if you don’t know what your score is.

By planning ahead, you can address mistakes in your report. If there is a mistake in your credit report, you will have enough time to double-check the data in the report and file a complaint to fix the error, if necessary. This is more convenient than convincing your prospective employer that it is truly only an error.

And remember, don’t stress about your overall credit score. Employers cannot see the overall score, but they can see individual debts and payment history. 

Remember They Need Your Permission

The good thing about credit checks is the fact that companies can’t run it without your written consent. It’s not just an oral agreement between you and the employer—it’s the law, and it can vary from state to state.

A company can get into trouble if they try to run this check without notifying you. Such an inquiry is considered unauthorized access if they do not get your written permission. Even if they don’t tell you about it, you’ll find out sooner or later. It will be listed on your report, and you will see it the next time you get your credit report. The law provides helpful protections to most job candidates when it comes to privacy and security.

You have the option to refuse to sign the authorization to access your credit report, but don’t be surprised if the employer thinks you have something to hide and decides not to move on with your job application.

However, even if you do have bad credit that you think your future employer won’t like, once they notify you that they have found questionable items in your report, you usually have time to provide additional information or explain the issue.

Mention It Before They Ask You

If you’ve checked your credit report and you’re aware of the fact that you have bad credit, it may be a good idea to mention it to your employer before they start asking about it.

After you’ve presented yourself as a good candidate, thanks to your abilities, experience. and qualifications, the HR manager may ask you if you have something to add or to clarify. That might be a good time to mention your financial history.

You can also skip this part and wait for them to tell you that they need to run a credit check and ask for your signature. Give them your permission and briefly explain what they may find in your report and why. 

Providing this information up front may be considered a bold move, but they may also appreciate that you are being straightforward and honest. 

But Don’t Mention If There’s No Credit Check

Before you apply for a job, or go to the interview, do some research and try to find essential information about the company. Specifically, try to determine if they will run a credit check before offering you a job. 

Social media makes it easy to find former or current employees of almost any company. See if you can get in touch with them and find out if they were asked to sign an authorization related to the credit report check. If you get more than one “no,” that probably means credit checks are not part of that company’s hiring practices.

If this is the case, the previous advice doesn’t apply. There is no need to mention bad credit loans you’ve taken out or financial struggles from the past if you know they won’t ask you about it. If they like you as a candidate and are considering  giving you an offer, mentioning bad credit might raise some red flags that wouldn’t be raised otherwise. If they don’t run credit checks on their candidates, it means they don’t take your credit score into account. They likely do not consider it an important factor for their employees.

Ask Your Friends for Help

It’s not that uncommon that we ask our friends for recommendations during our job search, but it could be even more significant if you have bad credit. If a friend recommends you to their employer, the potential employer may not feel the need to check your credit report. As long as they trust your friend and value their opinion, that employer may also trust their recommendation. Of course, this friend should know about your bad credit because it is a good idea to be honest with someone who is going to vouch for you.

One of your friends may have a say in the hiring process of a company, and if they know you, they could tolerate the fact you have bad credit. This is especially true if they know the reason that led to your lower credit score. Under these circumstances, a hiring manager could turn a blind eye to your financial issues and still give you a chance.

Prepare an Explanation and a Plan to Deal with Your Bad Credit

To show your prospective employer that you’re a responsible adult, be ready for when the bad credit question is brought up during the job interview or later on in the application process. Make sure you explain what led to your poor credit and how you’re planning to deal with it. The latter issue is particularly significant.

Having a strategy to improve your credit score will show your future employer that you are proactive, and you have no problem taking initiative when necessary. Show your employer that you’re not going to whine about your problems, but you will face them and try to find the best possible solution. This is a quality anyone is looking for in a prospective employee and may be a big plus for you.

Depending on the cause of your bad credit, your interviewer may feel for you, especially if the problem was a high medical bill or another unfortunate event. However, be careful about how you tell your story.

Know What Your Target Companies Are

If you want to have a better chance at getting a job that you need, you should think about where the odds are in your favor. There are two options that could work in your case.

  1. Pick a big company. 

A big company where employees don’t stay long and workers are replaced frequently is more likely not to run a credit check on their prospective employees simply because they don’t have enough time to do it. As many new workers go through their hiring manager’s office on a weekly basis, the employer will usually lack time to check everyone’s background simply because they need to get workers in the door quickly. 

  1. Target a smaller company.

On the other hand, looking for a job at a small company with few employees can also be a good option. These companies may have enough time to look into your credit report, but they usually have tight budgets and limited personnel, so their resources may not allow them to check every applicant’s credit report.

Good targeting can help you avoid your prospective employer looking into your financial history.

Make Sure You Really Nail the Interview

Rather than focusing on what your potential employer may think of your credit report, do your best to convince them that you’re a good candidate for the position. If you do really well in the interview and you show that you have all the needed skills and experience to do your job, the hiring manager might be ready to tolerate your bad credit even if that’s not the company’s policy.

Start by doing thorough research on the company. Find out what they appreciate in their workers 

and prepare for anything they could ask you. Dress appropriately for the interview, arrive 10 to 15 minutes before the scheduled time, and sit with good posture – you already know how important the first impression can be.

Don’t forget to prepare your answers on all the “tricky” questions that hiring managers like to ask. The more they like what they hear, the more willing they’ll be to overlook your bad credit and give you the job. 

Thoughts From CreditNinja—Don’t Ever Give up on a Job without Trying

CreditNinja wants you to know that there’s only one vital thing to remember about a job-seeking journey with bad credit–you always have a chance, so you should go for it, no matter what the odds. You have nothing to lose and much to gain.

Don’t let the fact that you have bad credit stop you from trying to get the job you want. Bad credit doesn’t always mean an unsuccessful job search, or an unsuccessful interview for that matter. If you’re a great applicant with an impeccable resume and lots of experience, any prospective employer will be happy to have you on their team, regardless of your financial struggles.

Don’t jump to conclusions and make an assumption that your bad credit will immediately disqualify you. You never know how much (or how little) it affects someone’s decision. You owe it to yourself to at least give it a try. If you give up on a job just because you believe they won’t tolerate your bad credit, you might miss some great opportunities. This job may be exactly the push you need toward making your credit great again.


  1. How Credit Checks Keep Qualified Workers Out of Jobs | Demos
  2. Can You Be Denied A Job Due to Bad Credit? | Self.
  3. Who Has Access to Your Credit Report? | Credit Cards | U.S. News
  4. Free Credit Reports | Consumer Advice
Read More
emergency reasons to borrow money
A few emergency reasons to borrow money could include debt consolidation, car or home repairs, medical bills, moving costs, or a large necessary purchase.  Life is…
how to get someone to pay you back
There are several ways you can ask for your money back and get it; you can take an effective communicative approach, offer different avenues for…
how to get rid of late payments on credit report
You can only get rid of late payments on a credit report if there was a credit reporting error or fraud—which can be done through…
missed payment for car repo
While missing just one payment may not do severe damage to you as long as you are able to contact your lender and cover the…

Quick And Easy Personal Loans Up To $2500*