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Rejected for a job? Check your credit score

By Rajiv Raj
August 03, 2015 12:51 IST
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You may wonder how and why your credit score is related to your job application!

A bad credit score in general is seen as an irresponsible behaviour of an individual. Inability to pay on time reflects that the person is not capable of take care of things.

Bad credit score also indicate bad intentions in general, says Rajiv Raj.

In financial world, when a norm becomes a benchmark, it can be a game-changer. Take for instance, the increasing acceptance of credit score as one of the tools to gauge the credit repaying discipline of an individual. Such has been the penetration of this tool that today it has become an integral part of loan approval process of banks. Today, employers in banking, financial services and insurance (BFSI) sectors check credit score of individuals before hiring them.

So, a bad credit score, also known as CIBIL score, can serve as a reason behind rejection of candidates.

In Western economies, using credit profile in considering selection of a candidate for a job has been prevalent for quite some time now. There are valid reasons for it. It is a common practice that employers avoid hiring individuals with criminal background due to the possibility of the individuals engaging into criminal activities which may affect the reputation of the employer. However, a bad credit score also has a blemish attached to it.

A bad credit score in general is seen as an irresponsible behaviour of an individual. Inability to pay on time reflects that the person is not capable of take care of things.

Typically before hiring, credit score checking is a part of the background check of the employee done by the human resource team of the employers. Bad credit score also indicate bad intentions in general.

If the credit report of an applicant has mention of settled dues against multiple credit card accounts, such a candidate may be seen as an individual with bad intentions.

If the credit report shows that the applicant has very high debt against her/his name, then such an applicant may not work efficiently. A person in debt trap may not deliver her/his best for the employer.

One may argue that such reasoning may be held against those innocent individuals who are victims of identity theft or a wrong entry in a credit report. And it is true. However the practice of accessing credit score is now getting established and information technology companies too are seen including credit report checking in the background check of a candidate. While the list of sectors in which credit report check happens increases, the best thing to do is to prepare yourself better.

One should check her/his CIBIL score or credit score at least once in a year. It is better to access credit score before applying for jobs. If you find any discrepancy, it is better to report it to CIBIL. Initiate appropriate action with the bank and credit bureau and follow it up till it is resolved.

In such cases, you have appropriate explanations to offer to your future employers. You can also provide the HR department of an employer the communication that has happened between the parties concerned and you for resolving the issues and HR can take a more informed decision than simply rejecting your application.

It must be noted that credit score should not be seen as a deterrent in getting a job. A good credit score can also improve your prospects of landing into a dream job. You stand in a better position if your credit score is better than other applicants. So pay your loans on time to make your credit profile exemplary.

The author is a credit expert with 10 years of experience in personal finance and consumer banking industry and another 7 years in credit bureau sector. Rajiv was instrumental in setting up India's first credit bureau, Credit Information Bureau (India) Limited (CIBIL). He has also worked with Citibank, Canara Bank, HDFC Bank, IDBI Bank and Experian in various capacities.

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Rajiv Raj