Employers begin to look at credit scores when making hiring decisions
- Jun. 10, 2013
- 2 Comments
Even though you nailed the interview, that one time you came up short on a credit card bill or paid rent a day late can prevent you from landing a job.
“Not only are employers looking at your Facebook page and your Twitter,” James Gentry said, “they’re also looking at your credit scores in some cases and making decisions based on that.”
Gentry, a professor of journalism who teaches courses in financial literacy and marketing communications, described the state of financial literacy in the country as “woeful,” and there’s no sense of urgency for undergraduate students to become aware of their credit histories and scores, even though they have influence in buying necessities such as housing, cars and insurance both now and in the future.
Employers checking credit scores has become more of a “hot button” topic in the past few years, he said.
However, the problem is that students don’t have a long credit history: if there’s one small blemish, it becomes a big red flag for employers and lenders.
Seventy-six percent of college students have credit cards, with the average credit card debt carried by undergraduates accumulating to more than $3,000, according to statistics from the Federal Reserve, Join Economic Committee, Sallie Mae and TransUnion.
In Gentry’s senior-level classes, less than half have credit cards.
“That means they’re missing a chance to be developing their credit history,” he said.
One of his students, Brendan Begley, grew up at a car dealership that taught him the importance of a high credit score. Before he graduated last month, he got a credit card and now has a “clean slate” for purchasing a car or home in the future.
“Being responsible with my credit decisions now will pay dividends eventually,” he said.
At the Money Management Center, peer educator Yoonsook Chung advises that students hold off on getting a credit card until their senior year, or, if their parents have good credit history, to get access to their line of credit earlier.
The most important component of a credit score is payment history, says Chung, and it’s difficult to recover from late payments.
“It’s just plastic for them sometimes,” Chung said of young credit card users. A pair of $100 jeans can turn into a $200 purchase if the balance isn’t paid on time or soon thereafter.
To build a good credit history, get the right kind of credit card, buy what you already have money for, don’t use more than 35 percent of the maximum credit limit and pay more than the minimum as soon as the bill comes.
“It’s a challenging enough world under normal circumstances,” Gentry said. “But if your finances are all screwed up, it’s even worse.”
Emma LeGault is a freshman from Emporia majoring in journalism. Read more from Emma LeGault.