In India, a person’s credit history is represented through a three-digit numeric score called the credit score. This rating is analyzed using the credit history found in the CIR, that is, an individuals’ credit payment history through loan types and credit institutions over a definite period of time. Furthermore, the agencies providing credit score also keeps track of a person’s payments, late payments, loan duration, etc.
Can credit score affect employment for an individual?
One cannot be sure about this practice since some companies across different sectors might check your Credit score and credit report before they shortlist you for an interview. It has been observed over the years that, many companies have started focusing on the financial health of an individual in order to evaluate several personal attributes such as reliability and honesty.
What do employers look for in credit reports?
An employer’s perspective needs to be considered in this case for carefully learning about the exact reasons to why CIBIL scores are examined before hiring individuals. Some of the prominent explanations are as follows:
Background Check
One of the legit reasons regarding the study of your credit report or score is concerned with a background check. For example, a person holding a bad CIBIL report can be regarded as an irresponsible person, and his/her capabilities might be seriously questioned. It is known that companies are reluctant in hiring a person marked with a bad record; the near future might see that an individual’s extremely bad credit report can affect his/her employment opportunity. Hence, bad credit and employment background check are deeply related.
Analysis of Bad Characteristics
- Would you trust a person who holds a bad CIBIL score? Such a person might not be seen as a credible employment option for an organization and his/her honesty would also be scanned thoroughly. In this case, the employer’s point of view functions and worries towards a peaceful workplace environment.
- In any case, if the company policy mentions that they won’t be hiring someone whose credit report is bad or has a score below 650, then even the innocent candidates would be trapped and resisted from being considered for the job.
High Debt Trap Hampers Performance
For a person who has a huge debt hanging over his head, focusing on work does get difficult. This fact is very well understood by the employers who are adamant in evaluating a person’s CIBIL score. Financial issues have a big impact on professional life, and it can totally mess up your head for not offering the exact results expected by the employer.
Do All Employers & Sectors Check CIBIL Score?
In India, analyzing the credit report of an individual is indeed a new trend. Although it is not that much prevalent but is slowly getting executed across different sectors. Currently, CIBIL report is tested at only senior-level interviews majorly across the Financial and IT sector. If you ask, What can employers see on a credit check? Then the answer should be, employers try to gain a deep insight into the candidate’s financial dealings and credit management skills. A careful analysis of loans and payment pattern is scanned which reveals a lot about an individual’s personality. There are strong speculations that in the next few years all the corporate would make it mandatory for candidates to submit their credit scores as part of the interview essentials.
How to Handle This Situation?
It is important to note that the RBI has formulated guidelines stating that only banks and other financial institutions have the authority to access credit reports maintained by companies such as CIBIL. Moreover, requests made by other companies/organizations aren’t entertained. Therefore, the need for you to produce the CIBIL report for securing employment is purely the choice of the company offering the job.
Can you get a job with bad credit?
Suppose you are about to apply for a job, the appropriate thing to do is to make sure that your credit history does not reveal anything negative. To ensure this, there are certain pointers you need to keep a check on:
Repayment History: One needs to make sure that his/her loan/credit card payments are regular and are made within the specified time. This is a highly influential factor in your credit score and report. Make sure there are no payment delays or non-payments fines present in your report.
Controlled Borrowing: Most people aren’t aware of this fact, but borrowing too much does hamper your CIBIL score. Supposedly, you have taken a major loan or used your credit card too much that your limit is almost reached; this is where your credit score might reflect poorly. Therefore, it is important to minimize the use of credit.
Credit mix: For an individual, in order to maintain a good CIBIL score, the records should comprise a mixture of both secured and unsecured loans. If you only have unsecured loans on your report then it might drop a negative effect on your credit report.
Loan Requested or Taken: It is crucial to remember that, a financial institution or bank can issue a request for your credit report whenever you apply for a loan. Therefore, too many inquiries under a small time frame might cause a negative impact on your score. If you are rejected for a loan or a credit card, make sure you wait for a while and not apply the same with another bank.
Resolve Struggle: There might be times when due to some error in communication, false information could be passed to CIBIL and could cause a negative impact on your report. Therefore, a person should keep checking his/her report for making sure that the right information is being replicated. Further, to avoid any sort of struggle or conflict, try to bring it to CIBIL’s attention and simultaneously inform your bank regarding any mishap.
It is advisable to inculcate a habit of checking your credit report. This would create an opportunity to ensure your credit reports speak positively and, consequently, assure that you do not skip career opportunities which may come to you in the near future.