Can you be an accountant with bad credit? This may feel like a ridiculous question to ask, but the number of Americans with no credit or poor credit may surprise you. In 2015, the Corporation for Enterprise Development (CFED) released a report estimated that 56% of consumers have a credit score low enough to disqualify them from healthy interest rates. This is a huge number of persons in the US and it is clearly a problem not constrained by socioeconomic status.
What Is A Poor Credit Score?
Most industry professionals report that a “poor credit” number would be a FICO score between 600-650. A report by Credit.com reports that a FICO score of 600 or below is considered “bad credit.” If your credit score is dancing around near any of these numbers and you want to be an accountant, you may be wondering how your credit score may affect potential employment opportunities. This is a valid concern and one worth spending some time considering.
Credit History and Employment
Historically, one’s credit history was primarily used (or “pulled”) by lending institutions for the development of car loans, mortgages, or credit cards. As the years have gone by, one’s credit score has slowly crept into other areas of life. It may now be part of the school application process, a job hunt, or apartment/car leases.
In 2012, Forbes released an article with some interesting details about credit scores and employment opportunities. Today, many companies routinely check the credit of prospective employees. And it is true that this process may impact hiring decisions. In 2018, the Society of Humans Resource Management (SHRM) reported that 95% of surveyed employers used one or more types of employment background screening. Note that a typical background check does not include your credit score. But, SHRM also reports that 47% of their members run a credit check for selected candidates, while 13% run a credit check for all candidates. Many employers are checking into their potential employees’ credit.
It is important to note that while employers can access credit history, they cannot see your actual credit score. However, the modified credit report they receive does provide insight into a potential employee’s financial situation. Employers who run credit checks will be able to see:
- Indications of bankruptcy
- Accounts in debt collection
- Debt-to-income ratios
- Evidence of late payments
- Outstanding judgments (court lawsuits)
Industries That Commonly Run Credit Checks
This information is likely not surprising. The most common job opportunities that are checking this information include:
- Industries/positions with financial responsibility (ß Accountants)
- Senior Executive Positions (CEO, CFO, CMO, etc.)
- Positions with access to high confidentiality persons or employee information
- Positions with access to sensitive property (intellectual capital, information technology, administrative powers)
Why Do Employers Care About Credit History?
If you are still wondering if accounting firms check credit, the answer is likely yes. And while this may be frustrating to you, there are some valid reasons for it.
Employers do have a reason to be concerned about the financial well being of potential employees. Financial irresponsibility or stress may indicate a variety of situations, many of which can affect an employee’s performance or corporate costs.
- Character indications: While individuals can learn and grow after financial mistakes, some employers see poor credit choices as an indication that an employee may not be able to handle professional responsibilities. They may not feel comfortable taking a chance on someone with a history of poor financial choices.
- Affects on job performance: Research shows that financial stress(ors) can increase employee absenteeism and lower productivity.
- Affects on the bottom line: An employee affected by financial stress may be “expensive.” Absenteeism, extra training costs, and increased healthcare costs are all costly outputs that may be related to an employee’s difficult financial situation.
Can You Be An Accountant With Bad Credit?
If you want to be an accountant but have a poor credit history, do not give up. There are a variety of healthy choices you can make, starting today, to still present yourself as a strong job candidate.
- Check your credit history first: Beat your employer to it so you aren’t surprised. Make sure your report is error-free. Make note of any possible areas of concern for a potential employer.
- Be honest about your mistakes: Everyone makes mistakes, but the healthiest applicants can speak honestly about them. Be prepared to explain your credit report, as well as steps you have taken to rectify or grow from the situation.
- Improve your financial wellbeing: New jobs are often the time for a reset. Can you pay down some debt? Should you invest in credit counseling? These are healthy steps to take and a potential employer would likely view them well.
- Watch your credit moving forward: Pay attention to your credit as you move forward. Employers are allowed to check again, especially before promotions, raises or transfers. You will want to ensure that the new healthy choices you are making are positively affecting your credit.
Mistakes Can Be Forgiven
As that 56% of Americans reported above indicates, there are plenty of people struggling with bad credit. If you are part of this group, that is ok. Everyone deserves that chance to grow and change and you should count on a future employer giving you that chance. Make sure you have evidence of the positive steps you are taking to rectify your financial situation. Be honest about where you’ve been and be honest about where you’d like to be. This confident approach should come through clearly and you can hope that an employer will both see it and trust it.
DQ Staff
February 2020
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