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How Credit Might Affect your Future Job Prospects

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It might be rather unbelievable, but for new graduates, building a good credit history is as important as achieving good academic results. While academic results help you to land a good job or get into an elite graduate school, a good credit history will influence your advantage at getting your dream job and applying for credit to finance the big ticket items in life, such as a car or a house.

Importance of having a good credit reputation

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 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 theft and embezzlement.


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1. 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.


2. Recruiters look at possibility for the potential hires to misappropriate funds

Another important consideration for recruiters is the possibility for the potential new hires to misappropriate funds. Without a doubt, there have been many of such incidents being reported in recent years. A recent example took place in Singapore in July 2019 of an accountant embezzling a sum of approximately S$41 million due to his gambling habits. It affected 21 companies and S$24 million has yet to be recovered. Illegal activities can take place at any level, not excluding those who are of upper management levels, hence some companies diligently conduct thorough annual credit checks for all employees in order to prevent such unfortunate happenings.


3. 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 put in placed 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”.

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.

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