Job seekers already down on their luck are bumping into a new and unexpected barrier: details deep in their credit histories coming back to bite them.
In what many credit counselors see as a growing trend during this bumpy economy, prospective employers are relying more and more on credit reporting agencies and the reports they provide to determine whether a job candidate should be hired.
"It just hurts. It really hurts right now," said Cate Williams, Vice President of Financial Literacy for Money Management International, a credit counseling agency. "You are seeing good, hard-working, backbone-of-America workers and they are nervous enough."
The Fair Credit Reporting Act is the law that governs both a consumer's right to protect their credit record and a prospective employer's ability to look into that history. In the past, employers used it to check basic facts, but many now appear to be delving more into the details, which can include information about debt, bill-paying history, bank accounts, and bankruptcies.
Credit experts say the timing couldn't be worse for job seekers.
"They had never been in credit problems before. Now they are unemployed, have great skills, they have great work history, they are carrying maybe too much debt, they might have some late payments because they are unemployed and so now they are possibly not considered because of this poor payment history," said Williams.
A recent survey of more than 430 businesses shows 47 percent check the credit history of job applicants, compared to 25 percent back in 1998. That growing trend could create a vicious cycle, analysts say, preventing those who need jobs the most from getting them.
As uncomfortable as it might be, the best advice, Williams said, is to get out in front of the message.