If you’re applying for a new job, you likely already know the things you need to get in order. Updated resume? Done. Reliable references? Confirmed.
But there’s another task you might not think to add to your to-do list: checking your credit. Depending on the industry and role, some employers require a credit check as part of your pre-employment background check in Canada.
To find out what part credit plays in the hiring process, I spoke to three Canadian recruiters who’ve worked with employers that require credit checks. They all said your credit history is just one piece of the puzzle, and a bad score won’t necessarily put you out of the running.
Do employment background checks include credit checks?
Employment background checks vary depending on the employer. Common verifications include your post-secondary education, professional designations, past employment, and references from managers. There may also be a criminal record check and, yes, in some cases, a credit check.
It really depends on the industry, though. Not all employers check credit. In fact, most employers in Canada do not check your credit report. You’re really only likely to see credit checks for jobs in financial services, such as banking, accounting, mortgages and insurance. They may also be required for jobs in law, real estate, procurement and contract management, and some public sector roles.
It also depends on the role and whether you have access to sensitive, confidential information. For example, someone working in the marketing department of a bank might not need a credit check. But someone handling customers’ investments would.
“Because you probably don’t want someone managing your money who’s declared bankruptcy three times,” says Jen Warrington, Founder and Principal of Recruitment and Career Strategy at The Warrington Group in Halifax.
Aman Sodi, Partner at Summit Search Group in Oakville, says she typically sees credit checks required for senior roles, such as at the director level and up.
No matter what industry you’re in, the potential employer must get your permission or notify you that they’re checking your credit report. You have the right to refuse, but that might mean you’re ineligible for that job.
If you’re worried about a hit to your credit score, don’t be. An employment credit check is considered a “soft inquiry,” so it won’t harm your score.
What do employers look for on a credit report?
Usually, employers that require credit checks are looking for fraud or bankruptcies. They’re not checking up on mere late payments or debt. But again, this depends on the industry and role.
“Every company’s going to be unique in terms of what they deem critical,” says Cal Jungwirth, Director of Permanent Placement Services for Finance and Accounting at Robert Half in Edmonton. “It’s not one-size-fits-all, unfortunately.”
Warrington says she’s seen some employers require a certain credit score. She once had an insurance client that wanted candidates to have a score of at least 680. But she adds that disclosing any credit issues upfront and giving context can often give you a leg up. Employers can’t see your full credit report, so they won’t know what’s impacting your score. Dings like late student loan payments or credit card debt might be easy to explain away.
Both Warrington and Jungwirth say they’ve seen candidates denied roles because of the credit check, but it’s rare. Sodi says she hasn’t seen a candidate get rejected solely because of their credit, although it may play a factor.
“It’s multi-pronged,” says Sodi. “Clients are generally not making a decision based on one aspect. It’s everything: Their resume, how they present themselves, their references, their credit check, their education, and, depending on the level of role, the credit check might have more weight.”
She adds that she’s never had an employer request a certain credit score. She also says that when credit checks have been required, they’ve typically been completed at the final stage with the top candidate.
Bad credit shouldn’t stop you from getting a job
All the recruiters said they wouldn’t discourage someone from applying for a job just because of a low credit score. But they do recommend you be prepared to discuss it if you’re in an industry that requires a credit check.
“Absolutely disclose it upfront. Transparency is always the best policy,” says Jungwirth. “And then the organization could either say, ‘Yes, based on what you’ve shared, we can work with you,’ or ‘Unfortunately, no, we’ve got certain requirements and certain credit scores cannot be considered.’”
Warrington recommends asking what the background check process looks like. This gives you a chance to flag anything you think might be an issue. You don’t necessarily have to give tons of personal details, and you shouldn’t overshare. You just want to show your integrity.
“I don’t need to know all the details,” she says. “But if I have that information on the front-end, it allows me to have conversations at the appropriate stages versus finding out on the back end.”
Sodi says that when employers use credit checks, what they’re really looking for is context.
“They’re looking for stability rather than a perfect credit score,” she says. “So, if there's significant issues in someone’s history, a candidate could offer a brief, factual explanation of what happened.”
Even if your score does eliminate you from being considered, it’s not the end of your job search. Warrington says that if you have a strong resume and you’re honest about your situation, the company or recruiter might keep you in mind for other roles. It’s all about presenting yourself in the best light and building relationships.
“When you’re going through a hiring process, you usually have one point of contact,” she says. “It might be the HR manager or a recruiter. Building that relationship is key, regardless of what you might have to disclose or not disclose.”
And if you have your heart set on a career that requires a specific credit score, you’re not excluded forever.
“Unfortunately, some industries may be closed off for an individual with a poor credit background,” says Jungwirth. “My recommendation would be to find gainful employment in another industry and build that credit history. Ultimately, that door should open down the road.”
