Does Debt Affect Employment Opportunities?
Experian acknowledges that many employers check credit reports, but they deny that employers can see an individual's credit score. With a candidate’s permission, employers can reportedly see limited credit history information, but some data is omitted from your credit report to remain compliant with equal employment opportunity laws. Data your employer might not have access to include your birth date or information about your spouse.
When employers check your credit report, they are trying to answer two important questions. The first is whether you can be trusted with money, which they believe your debt load may show. The second is whether you are who you claim to be. If your employee sizes up your credit report against equally qualified candidates with better credit histories, they might get hired instead of you. How much money you owe can take a toll on your credit score. If you’re looking for a new job, some employers also count this as a strike against you.
However, this may all change soon. The federal government recently passed legislation aimed at preventing employers from doing credit checks. It makes exceptions for situations where employees need a national security clearance. Several states and cities have already banned the use of credit checks for hiring purposes including New York City, Chicago, the District of Colombia, California, and Oregon.
How Do Debt Obligations Affect Work?
Even in states where employers cannot use credit information for hiring, your financial obligations can affect your work-life in several ways.
Decline in Productivity
When you’re struggling to pay bills, it can be difficult to think of anything else. Even if you have a high-paying job, watching all your disposable income go toward paying off money borrowed during a less stable time may distract you at work. This can lead to low productivity over time and a higher likelihood of making on-the-job mistakes.
Thinking about the money you owe could also keep you up at night. This lack of sleep can make driving to work dangerous. The longer your commute, the worse the situation becomes. Drowsy drivers cause 72,000 crashes every year, resulting in roughly 6,000 deaths and 44,000 injuries. If you’re having trouble sleeping at night because of lingering debt, discuss this with your physician.
Depending on who you owe and whether you are in default, a creditor may resort to garnishing your wages to get their money back. If an employer has never dealt with this situation before, they may need to file more paperwork or even purchase new payroll software to account for the change, which can cast you in a negative light.
Negative Phone Calls at Work
In some states, creditors can reach out to you at work. Even when they are courteous, these phone calls can feel intrusive. In addition, your boss may not appreciate you taking personal calls at work; it is even worse when creditors call your boss. This can be extremely embarrassing and can negatively affect your work relations.
While not necessarily a bad thing, debt often determines how you structure your compensation package. For some people, that means rushing to take the first job that pays the bills. When workers can design their own compensation packages, they may find themselves turning down health insurance, retirement savings and even vacation time to take the cash balance to pay off loans. While commendable, this can put you at greater financial risk over time.
Debt is a huge burden that weighs on people in different ways. Some people shrug it off and keep spending but soon begin to feel overwhelmed by late payments. Others try to fix it from the very beginning but then struggle to stay afloat. This is often the case when people take on debt that was out of their control such as medical bills for themselves or a loved one.
Get Help Resolving Debt
If you feel overwhelmed just trying to keep up with bills and other payments, there’s nothing wrong with asking for help. Even the most resourceful people sometimes need assistance with all that life throws at them. At Financial Rescue, we offer debt settlement and debt consolidation programs to help people get their financial lives back on track. Are you ready to reclaim control of your life and your finances? Contact us today for more information.