When you’re rejected because of your credit rating

Dear Bob …

In the late 1990s I entered into a business partnership with a longtime colleague. The enterprise did not produce the results we were expecting and we reluctantly dissolved the corporation.

I paid every last penny I owed to my creditors, but in the process my credit rating was lowered from excellent from fair. Yes, I fell behind in some of my payments (although I notified my creditors that this would happen) but my main responsibility was (and always has been) paying my mortgage and feeding my wife and kids.

The reason I go into all this detail is that I interviewed for a job with a Fortune 500 company, and the question of my credit rating came up AFTER I’d had three interviews with the company and was basically waiting for them to offer me the position I had applied for.

Although I discussed my personal business experience during the interviews, I did not mention the credit issue. When the head of human resources at the company mentioned the results of their credit inquiry, I explained what had happened in detail. No job offer ever came my way, and a friend of mine who works at this company confided that my credit problem raised a red flags – outweighing my more than 20 years of experience, and everything else.

I talked about this problem with another friend of mine, a headhunter, and he told me that what I should have done when I filled out the company’s application was to cross out (and initial) the line where I authorize the company to check my credit history, and that if the issue ever came up I should simply tell human resources that I was applying for a job and not for a loan. I will not question my friend’s experience as a headhunter but I think that his approach would raise more red flags than simply telling the truth.

What do you think? Should I wait until all the adverse reports in my credit history are deleted, like I know they will after a certain amount of time? Is my friend, the headhunter, right? Or is there another way?

– Discredited

Dear Discredited …

Imagine how bad it would be if you hadn’t paid your debts.

Credit checks are, like drug testing, on the rise as part of the employment process. From an employer’s perspective they almost have to be. Companies have to exercise, and demonstrate that they exercised proper due diligence when hiring anyone who can, through their position, embezzle or otherwise steal from the company. Employees with financial difficulties are more likely to do so.

That’s point one. Point two: If you’re trying to pass an HR screen, insulting wisecracks aren’t a promising tactic. Your headhunter friend is forgetting the definition of a professional: “I have no problems, I cause no problems, I solve your problems.” Resist the temptation (although it is a great line).

Your best course of action is to fix your credit rating. Obtain a copy of your credit report and find out what items on it are causing the fair rating. If they’re disputed items, write the credit bureau with your side of things to try to get them changed. If they were put their by companies you have paid off, and with whom you maintained good relations during the process, contact the companies in question and ask it to clear the entry.

Talk to your banker, too, to ask about additional steps you can take to improve your credit rating under the circumstances – I don’t pretend to be an expert, (although with a name like “Bob Lewis” all sorts of strange things have appeared on my record from time to time).

The other point to consider is this: The larger the employer, the less likely it is that anyone will deviate from policy. You applied for a position with a Fortune 500 corporation. If their policy is that a credit rating of good or better is a requirement, then nothing you say will change it.

The solution: Don’t apply there. I read recently that 75% of all jobs in the U.S. come from small and medium-sized businesses. Luckily for you, these are the ones more likely to pay attention to circumstances as well as the ratings themselves.

Last bit, and an obvious one: Be squeaky clean from this point forward. For your explanation to be credible, there can’t be any new entries in your credit record.

– Bob