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Can an Employer Deny Me a Job Because of My Bad Credit?

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In a Nutshell

Employers may be legally empowered to deny you employment based on the results of a credit check depending on where you live, who you’re hoping to work for, and the nature of the position for which you’re applying. But, a potential employer may be conducting a credit check only to evaluate targeted negative information. As a result, bad credit (generally) may not prevent you from landing your dream job even if your prospective employer checks up on your credit.

Written by Attorney Kassandra Kuehl.  
Updated July 22, 2020

There are not many things more stressful than doing a credit check only to discover that your credit score is far lower than you’d like it to be. Good credit is often key to securing loans, housing, and even to securing a job. Although it’s not always obvious why a potential employer would want to complete a credit check as part of the hiring process, many employers do examine the credit histories of prospective employees when making hiring decisions. As bad credit can keep you from landing the job you want, it’s important to understand how your credit history can impact your job search. If you know what to expect, you can create the strongest possible plan for landing your dream job despite having less than ideal results tied to an employer credit check.

Why Do I Have Bad Credit?

A poor credit score is generally caused by a rocky financial history. All consumers start with no credit score when they first begin building their credit history. If they pay their credit card bills, mortgages, medical bills, student loans, and other accounts on time, their scores will go up. However, when consumers fail to pay credit cards and other debt, make late payments, have accounts sent to collection agencies, have judgments levied against them, and otherwise don’t stay on top of their finances, their scores drop.

If you are unsure of what your credit history looks like, you can pull a free credit report from each of the three major credit bureaus on annualcreditreport.com. You should review your statements from Equifax, Transunion, and Experian before you begin a job search, as you’ll need to check each report for errors. Even consumers who aren’t actively job hunting should pull their credit reports annually to make sure that their credit scores aren’t being negatively impacted by misinformation submitted to any of the major credit bureaus.

Job Application and Credit Reports

When prospective employers are assessing whether to hire specific job applicants, they often conduct both criminal and financial background checks on the most promising candidates for any given position. Their human resource management may require them to take this step for legal or licensing reasons. Some jobs allow workers access to sensitive information or require workers to have a security clearance; employers need to trust that their new hires don’t have a history of criminal behavior related to their job responsibilities. Similarly, some employers use employee credit checks to better evaluate the risks of hiring specific job seekers. For example, if you’re drowning in debt and you’re asking for a job managing client finances, the employer may understandably need to ask you some questions about why you’re qualified to give financial advice when you’re struggling with your own financial situation.

Are Prospective Employers Permitted to Deny You for a Job Based on a Credit Rreport

Employers may be legally empowered to deny you employment based on the results of a credit check depending on where you live, who you’re hoping to work for, and the nature of the position for which you’re applying.

Federal jobs are fairly straightforward, as the federal government is not generally permitted to deny employment based on the results of a credit check under federal law. However, if the position you’re applying for requires a security clearance, you may not be eligible for that position if your credit history prevents you from securing that clearance. You’ll therefore want to make sure that you fully understand the requirements of any job you apply for with the federal government before you invest time and energy applying to a job for which you might not be eligible.

The lawful hiring practices of private employers are more nuanced because each state has its own laws relating to the uses of credit information for employment purposes. Some states and major cities have enacted legislation that protects applicants from having their credit histories used against them in hiring and other employment practices. However, the majority of states still allow private employers to use poor credit history as a lawful reason to reject a job seeker’s application.

If an employer conducts a credit check as part of the hiring process, that employer is required under the law to disclose to the applicant that their credit will be reviewed. Before the employer can pull the applicant’s credit history, the applicant must provide consent. Note that an applicant’s credit score is not usually recorded in background check reports, but a detailed credit history from the past several years may be included. Not all employers go through this time-intensive process, but some will if they’re looking for specific red flags. These employers may have concerns about the risk of potential fraud by their workers, the need for a security clearance or licensing eligibility, or evidence that the applicant may be vulnerable to bribery.

States That Prohibit Employment Discrimination Based on Bad Credit 

Although the federal Fair Credit Reporting Act doesn’t prohibit the use of employer credit checks during the hiring process, more than 10 states and several cities have passed regulations that restrict employers’ ability to utilize credit information when making employment decisions. These jurisdictions include:

  • California

  • Chicago

  • Colorado

  • Connecticut

  • Delaware

  • District of Columbia

  • Hawaii

  • Illinois

  • Maryland

  • Nevada

  • New York City

  • Oregon

  • Philadelphia

  • Vermont

  • Washington

Will a Bankruptcy Prevent Me from Getting a Job?

When individuals file for Chapter 7 or Chapter 13 bankruptcy, this action is recorded in their credit reports and is reflected temporarily in their credit scores. Sometimes, filing for bankruptcy can reflect positively on an applicant. For example, if a job seeker is applying for a job that requires a security clearance, a bankruptcy filing illustrates that the job seeker has proactively dealt with their debt and may therefore be more difficult to bribe. In other scenarios, news of a bankruptcy will generally be treated by employers in the same way that any other negative credit information might be. Both protections against discrimination and lawful consideration of credit information in employment decisions applies to bankruptcy in the same way that they apply to outstanding credit card debt, a bad overall credit score, and any other red flags on an applicant’s credit report.


Before you begin hunting for a new job, take time to thoroughly review your credit reports from all three major credit bureaus. Being proactive in this way will help ensure that any misinformation on your reports won’t impact your job search. If your credit history looks accurate but you’re worried that information revealed by a credit check could hurt your chances at securing employment, make sure to research any protections that your state or major city affords you. Your state or city may prohibit hiring discrimination based on credit history, which will give you one less thing to worry about. But even if you’re not protected from this kind of discrimination, keep in mind that a potential employer may be conducting a credit check only to evaluate targeted negative information. As a result, bad credit (generally) may not prevent you from landing your dream job even if your prospective employer checks up on your credit.

Written By:

Attorney Kassandra Kuehl


Kassandra is a writer and attorney with a passion for consumer financial education. Outside of consumer law, she is focused on pro bono work in the fields of International Human Rights Law, Constitutional and Human Rights Law, Gender and the Law. Kassandra graduated from Universi... read more about Attorney Kassandra Kuehl

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