How to Explain to an Employer Why Your Credit Is So Poor?

Explain credit problems that resulted from layoffs and other uncontrollable circumstances.

Explain credit problems that resulted from layoffs and other uncontrollable circumstances.

Keep your credit history to yourself until an employer seeks to view it. The U.S. Fair Credit Reporting Act requires employers to get your permission before checking your credit history. Don’t assume that you’re automatically out of the running for a job or promotion if you have bad credit. Employers often understand that various economic factors adversely affect people’s earnings. Your goal is to give plausible reasons for your bad credit to ease a company’s concerns about employing you.

Disclose your credit history to an employer in private before he runs a credit check on you to avoid the impression that you’re hiding financial problems. Explain the circumstances that caused your credit troubles, such as a layoff, a long period of unemployment or high medical costs paid for you or a family member. Consider that an employer may be willing to overlook credit problems that resulted from circumstances that were beyond your control.

Outline why your bad credit isn't an indication that you’re irresponsible by explaining the steps you've taken to fix your financial problems. For example, cite the number of debts you’ve paid off or reduced since you first began having credit problems. Tell the employer about any debt-counseling or debt-management programs you're participating in to get your finances in order. Reveal steps you’ve taken to cut costs, such as moving in with relatives to share expenses.

Divulge details about your personal life if they have a significant impact on your poor credit history. For instance, briefly discuss a divorce that resulted in a considerable decrease in your household finances, particularly if your former spouse was the breadwinner. Mention whether caring for an elderly parent or another adult relative has caused you to fall behind on bill payments and put you deeper in debt. Be prepared to explain your plan for managing such additional debts.


  • Don't misrepresent your financial problems, because an employer can use your credit report to discover the facts.
  • Employers are not required to give you an opportunity to explain your bad credit.

About the Author

Frances Burks has more than 15 years experience in writing positions, including work as a news analyst for executive briefings and as an Associated Press journalist. Burks has banking and business development experience, and she has written numerous articles on consumer issues and home improvement. Burks holds a bachelor's degree in political science from the University of Michigan.

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