Your credit can also affect the type of job you get — or don't get. Employers have made a common practice of checking potential employees' credit during the hiring and promotion process. The belief is that good credit is a sign of a good employee. This practice is gradually losing steam. Employers have other ways to systematically evaluate job candidates, such as background checks and personality profiles. According to Craig Watts of the Fair Isaac Corporation, credit scores are probably not the best predictor anyway. The link between a FICO credit score and employee performance is still somewhat unclear, and Fair Isaac does not encourage credit scoring for every single job applicant.

Employers Check Your Credit

Despite uncertainty as to its effectiveness, credit scoring is often used by employers. They may not fully understand how it works, but they like the results they get. All other things being equal, your chances of getting that job or promotion are much better if you have good credit. To some extent, this makes sense. A person with good credit has paid bills as agreed, and managed his finances responsibly. In addition, you could argue that he's had a little bit of good luck on his side (no major illnesses or accidents that threw him off track).

In some instances, it makes perfect sense to check a job candidate's credit, particularly when employees will have access to cash, valuables, or valuable information. If somebody is in dire financial straits, she may be tempted to use that cash for her own purposes. Bank tellers and armored-car drivers come to mind in this situation. Many employees at financial institutions such as banks and credit unions go through a credit check.

Top Secret

Individuals applying for sensitive government jobs often submit to a credit check. In the interests of national security, the government wants to make sure that people with access to sensitive information have good credit. Consider someone who knows the details of an ongoing overseas surveillance operation. If he spoke to the wrong person, other people could end up in grave danger.

Among other things, people who work with classified information are susceptible to bribe offers. If you have a financial hardship, you might be more willing to sell information to a high bidder. Obtaining government clearance requires that you go through a rigorous background check and interview process. Nevertheless, the stakes are extremely high, and foreign governments and others can come up with some pretty big bribes if they need to. If you have any ambition to work with sensitive information, it is extremely important that you manage your credit well.

The Marketplace

The world is full of companies that offer pre-employment and ongoing credit-check services. To get an idea of what your employer may be looking for, visit the Web sites of these companies. They claim that it is essential to screen any job applicant who may handle merchandise or money. They mention that pre-employment credit checks are a good way to find out if the candidate is likely to fulfill her obligations.

In addition to trying to predict your behavior, employers can verify your past. Employment-screening companies are selling the idea that your potential employer can view your previous addresses and previous employers. This gives them the ability to cross-reference information on your resume. In recent years, there have been several high-profile cases where an individual lied about his employment history. Some of these cases might have been avoided if the employee had a better understanding of credit histories.

Employers also benefit from viewing your employment history, because they can make a judgment on whether or not you change jobs too frequently. Your credit files may not have every single job you've held, but they might have several. If you change jobs frequently, this may be a tip-off that you will not be around for long. Employers typically want to hire individuals who will stick around for many years to come.

Always Get a Copy

When a potential employer is going to check your credit, or use some other type of background check, they must get your consent first. You may see a check box you can mark to get a copy of the report. You should always mark this box, so that you can see what others are saying about you, and you're entitled to a free report. In an ideal world, everything will be completely accurate. However, an employer could potentially use this information against you without telling you. They are required to inform you if they take adverse action against you based on this information, but they might just claim that they had a better applicant for the job. In such a case, you would never know what your report said about you.

Seven Years of Bad Luck

As a general rule, negative information stays on your credit reports for seven years. Late payments, chargeoffs, and paid-off tax liens will appear to anybody who pulls your credit. After seven years, the credit-reporting companies are supposed to stop reporting those negative events. However, they do not delete the records entirely. In fact, those items can be reported in some situations. One of them happens to be a credit check for employment that is expected to pay $75,000 a year or more. If you are applying for such a job, those old delinquencies may show up on your credit report.