You may not think that your credit score matters when you apply for a new job, but your future employer might think that it does. 

Not everyone agrees that your credit score is related to your ability to perform your job, but some employers think differently. According to the Society of Human Resources Management, 60 percent of employers run a credit check on potential employees before hiring. That's up from just 25 percent of employers in 1998 and 43 percent in 2006. 

Some people think obtaining a credit report is the same as checking personal references, but others don't agree. In this unstable economy, a divorce or layoff can result in late payments or high medical bills, both of which can ruin a good credit rating in a short amount of time. 

With so many people applying for one job, employers are looking for ways to disqualify applicants to narrow down their choices. 

Why Do Employers Use Your Credit Score?

Some employers check your credit due to the nature of the job. Jobs with the government or at a bank or other financial institution are more likely to require a credit check before you can be hired. Applicants for jobs where there is a risk of embezzlement or fraud should also expect a credit check before being hired. Furthermore, some companies perform regular credit checks to ensure that their employees are trustworthy, especially if the job requires managing money. 

Some companies use your credit score to compare you to another potential employee. If a job applicant has a high level of debt or delinquencies, it could distract them and cause poor performance at work.

An employer may also use a credit score as a judge of character. Having a good score means the applicant is trustworthy and dependable. 

Personal references are not always reliable, but a credit score can tell about the applicant's history. A credit report also contains current and previous addresses, phone numbers, employers, spouse's name and any aliases, which can be valuable information for an employer. The employer can use this information to compare it to the person's resume and application. Any discrepancies may mean that the applicant lied or is hiding something. 

A person may report making a high salary at their previous job, but a credit report may show that they had credit problems during that time. Is the applicant lying about their previous salary? Or are they poor at managing money? Do they have financial problems that are taking all of their money? Will any of these problems negatively affect their job performance?

Applicant Rights

Under the Fair Credit Reporting Act, job applicants have rights if the employer uses their credit report as a basis for hiring. The applicant has the right to a copy of their own credit report. If the employer decides not to hire the applicant based on their credit report, they must be informed why they were not hired and given a copy of the information from the credit report. 

Improving Your Credit

If you are looking for a job, be prepared to talk to a potential employer about your credit score. Try to improve your credit before you look for a job if it is possible. 

Get a copy of your credit report. Read it carefully to see if there are any mistakes. If there are, you can dispute them for a correction, but this process takes some time. Go to the Federal Trade Commission's website for instructions to file a dispute. 

If a potential employer asks your permission to get a copy of your credit report, but upfront with them. You will look better if you bring up any problems with your credit before they find out. If your credit problems are due to an illness or layoff, briefly explain the situation. 

By talking to employers about your credit history, you control the situation instead of the credit reporting agency. 

Negative marks on your credit does not mean that you will automatically be disqualified for the job. Many people have some bad marks on their credit, in part due to the poor economy. No one is perfect, so it is best to be honest about your past. 

Those who have been without a job for a long time are more likely to have negative marks on their credit report. Many job applicants have been out of work for several months, so you are not alone. If your layoff has damaged your credit, rest assured that has damaged many other people's credit scores also. 

If you are competent and can perform the job well, your employer may understand the reason for your poor credit. Be upfront about your credit report because that shows that you are honest, and that is one quality every employer looks for in a potential employee.