How your Credit Reputation May Affect Your Future Job Prospects

A bad credit reputation is usually due to consumers not repaying their debts on time, which results in your credit score dropping significantly. A good credit reputation is a strong indication of a person’s financial soundness, competence and capability.

Therefore, your credit score may play a role in your approvals or rejections of not only credit applications with banks, but could possibly affect your job applications.

Unfortunately, not many fresh graduates or job seekers are aware that a below average score grade may affect their future job prospects. Companies are increasingly conducting employment checks on prospective hires so as to minimise any potential cases of financial fraud and embezzlement.

A low credit score may be correlated with irresponsibility and bad financial management

Companies are generally more inclined to hire those who come across as responsible and your credit report is a clear reflection of whether a person has been responsible and diligent in his or her repayment. Therefore to a potential employer, a low credit score may be correlated with irresponsibility and bad financial management which poses as a red flag to future hirers.

Hence, it is essential to understand that having a good credit reputation may affect us in more ways than imagined.

Recruiters want to avoid legal liability

Companies may also want to avoid legal liability for negligent hiring. This is especially relevant for banks and Financial Institutions as they are closely regulated by the Monetary Authority of Singapore (MAS). As part of the Fit-and-Proper guidelines by MAS, they are obligated to do employment checks which include credit checks on pre-hires.

Under MAS’s Guidelines on Fit and Proper Criteria, it is stated that be it an institution, exempt financial institution, exempt entity or a fund management company, they must satisfy MAS that “it has in place appropriate recruitment policies, adequate internal control systems and procedures that would reasonably ensure that the persons it employs, authorises or appoints to act on its behalf, in relation to its conduct of the activity regulated under the relevant legislation, meet the relevant fit and proper criteria of these Guidelines”.

Another important consideration for recruiters is the possibility for the potential new hires to misappropriate funds. Therefore some companies diligently conduct thorough annual credit checks for all employees in order to prevent such unfortunate incidents.

Obtaining your personal credit report

It is vital for us to obtain our personal credit reports so as to understand the banking information reflected which will also be the same data that employers (Human Resource) will receive during credit checks. (sample credit report- https://www.creditbureau.com.sg/pdf/Enhanced-Consumer-Credit-Report-2019.pdf)

In a nutshell, having good credit habits and prudent behaviour far outweighs the negative consequences of having to build or resolve a bad credit rating. Always remember to only spend within your means, track your monthly expenses regularly and apply for loans with the careful consideration that you will be able to repay your debts on time and in full.

Do visit our Facebook page to know more about credit reports, personal finance and how to maintain a good credit reputation!

This article was contributed by Credit Bureau Singapore.