I have been reading about credit history and job applications. In some US states, it is legal to require a credit history check as a condition of employment.

What sociological evidence exists to suggest that people with bad credit scores are also bad employees? A 2012 policy analysis by Demos suggests that no such evidence exists and that it is a form of discrimination. Also, a study by Bryan and Palmer disputes the validity of this claim. Have other studies supported the link between bad credit history and bad job performance? (I'd prefer independent studies if possible -- i.e, not ones commissioned by credit agencies). Thanks.

(here's a related question on this SE ).

UPDATE: Bob Lawless, a law professor and bankruptcy professor who runs a blog about credit and bankruptcy, has written an extended discussion and a bibliography of important articles on this topic as of 2014.


  • 7
    This might be a better fit for Skeptics stack exchange if you can find a notable source claiming that there is a correlation. Jun 12, 2018 at 15:17
  • I vaguely recall someone doing a report on this, where they showed that credit rating services tried to claim in marketing to companies that credit rating would help with things like fraud prediction and good performance, but then were called before Congress and testified that they were aware of no evidence supporting that and they pretended they weren't really claiming it. If I'm not misremembering, it was John Oliver: youtube.com/watch?time_continue=3&v=aRrDsbUdY_k Not an answer or proof, but perhaps a start in the right direction
    – BrianH
    Jun 12, 2018 at 15:27
  • BrianH, amazingly, I know this video, and in particular at the 2:49 mark on that John Oliver video a TransUnion rep admits that his company has no evidence suggesting that such a link actually exists. Jun 12, 2018 at 15:32
  • 4
    I'm voting to close this question as off-topic because it's asking us to find a study. Jun 12, 2018 at 16:48
  • I don't think it's like loan application where bad credit equals a rejection. If you have bad credit and you apply for a job as a computer programmer at a bank. They're going to ask you questions and do a background check. That's standard procedure, but it's not an automatic rejection. I know people who work with money who suck with money.
    – user7360
    Jun 12, 2018 at 20:35

4 Answers 4


Employers may be worried about correlation between poor fiscal decision-making and poor workplace decision-making. Both Forbes and Monster have articles that speculate but don't confirm or back these speculations up with studies or data.

Beyond that I have not found any direct evidence to support or deny the claim that credit correlates with job performance.


In some US states, it is legal to require a credit history check as a condition of employment.

I think you are making a bad assumption, specifically that the US government thinks its an indicator of "bad employees".

For certain position in the US government, employees need access to highly classified information. They felt that people who are in difficult financial situations are more susceptible to being bribed. So they themselves want this law in place and do in fact do credit checks for any position requiring any level of security clearance .

Once its allowed, you can't really stop an individual employer from doing the same, and that employer may think "Bad credit=bad with money=irresponsible"

On a side note, I have no idea if any studies have been done to determine if people in financial distress are more likely to be bribed, but I can see the logic behind the thought.

  • That's a good example, although I don't know if that's the primary reason - there are plenty of laws which do pertain to federal employees only. For private companies, there's trade secrets or access to client's financials (for example) which the company could consider tempting enough. From what I've heard, financial sector and high-level positions in particular often run credit checks of potential hires for this reason.
    – user812786
    Jun 12, 2018 at 15:53
  • @whrrgarbl - many clearance holders work for companies, not the government itself. For example, Los Alamos National Laboratory is run by a contractor for the government (GOCO model) - their people are not federal employees.
    – Jon Custer
    Jun 12, 2018 at 18:37
  • I recall a paper I read that employers see a different type of credit report. It's not the same as a consumer report but more in depth with paying back your obligations and how much obligations you have. Consumer credit report mainly focuses on whether you can get a loan or not, and a low score may not translate to what your employers see. So if you have a really low score, that might not be bad in the eyes of employers.
    – Dan
    Jun 12, 2018 at 19:36
  • @Jon I'm aware :) This question isn't about clearance holders; my comment was just to point out that the reasoning "because this applies to the government, it has to be allowed for all employers" isn't necessarily true.
    – user812786
    Jun 12, 2018 at 19:46
  • @whrrgarbl exactly just because "governments can do it" doesn't mean employers can and security clearance Is one of those things. Jun 12, 2018 at 20:24

It depends on the industry you are going in. I don't think bad credit = bad workers. In all cases, it's a point of possible failure that can be avoided. Many industries are putting exceptions in given the recent recession. The government, for example, now considers some credit card debt as okay so long as you've been making payment. In the past, any credit card debt that wasn't paid back the same month, was a automatic red flag. The historical trend is that not every employee with bad credit is bad, but nearly all employees who went against the government or banks tend to have made poor financial decisions. For example,

  • Government - Given historical information of past employees who went against the government, they typically have money problems or bad spending habits. By having poor credit, it's a indicator that you might sell off information in hopes of meeting those debts. It is also a good blackmail/bribery subject if you try to keep it hidden - from say your spouse because you spent the life savings - so you might try to "hush" people by stealing information from the government in exchange of them not disclosing your bad habits.
  • Banking - By having bad credit or a history of not paying debt, it means you might be tempted to cheat or "shave" off the top of other people bank or payments. Again, banks are going off historical information on past employees who cheated them, and people who owe debt or want to pay off large debts tend to cheat the system in hopes to get money to pay the debt. For example, using a bank card and writing off a rent payment as some bogus company expense.
  • Fire/EMT/Police - I wanted to volunteer for EMT a while back in college and during the first meeting, they told us they'd do a full background and credit check and at least one person from the class dropped out when they failed the credit check. I ultimately couldn't do the work because of the time constraint wasn't working with my schedule. The consideration here is that you'll be dealing with people in vulnerable positions and you may be tempted to "borrow" if you notice that stack of jewelry on the counter, or that valuable watch on their wrist. Again they are going off historical trend and it isn't to say all bad credit people are bad, only that when people do bad things, they tend to have financial problems so it is a risk worth avoiding.

Generally speaking though, all these institutions have "forgiveness" policies. For example, the government background check might say your debt was back when you were a college student, over-extended a bit, and you attempted to pay it off once you got a job and haven't made any bad choices since. If the bad credit report was recent, then it might be harder to write off as they can't tell if you'll indeed pay it back and it might mean you have a problem that might not get resolved.

It all goes into age of debt, the amount of debt, and whether or not you attempted to fix it. If you did none of that, chances are you won't get hired by these types of jobs.

  • Unfortunately it doesn't fall under discrimination laws in the USA. Discrimination laws only fall under age, disability, race, sexual preference, gender, or religion. Now we could argue that gambling debt falls under ADA if you've been diagnosed with gambling problems by a professional or if you have some sort of mental health disorder that causes you to spend money uncontrollably. However, I have yet heard of such case and I'm betting it would be impossible to win.
    – Dan
    Jun 12, 2018 at 18:04
  • As I said earlier, in modern times, some of these institutions are a lot more lenient in regards to debt. They just need to see that you made efforts to pay back the debt and that you do not have a history of making bad financial decisions. Being poor does not equate to making bad financial decisions constantly, but this isn't about being poor. It's about temptation. These institutions see it as a temptation point like dangling a life raft in front of a drowning person, or a jail key to a prisoner. Lives could be put in danger if a person decides to sell or "borrow" to pay back their debt.
    – Dan
    Jun 12, 2018 at 18:09
  • @Dan you may want to add that it also includes any job requiring a security clearance. Jun 12, 2018 at 18:34
  • The major consideration looking an security clearance applicants credit score, is to determine if there is a pattern of bad choices, if you are currently overextended finically then as this answer illustrates your likely to repeat that behavior. You can have bad credit and NOT be over extended finically. Besides a bad credit score by itself will not be the only disqualification for a security clearance.
    – Donald
    Jun 12, 2018 at 23:34
  • @Ramhound Historical trend shown that people who sold information from the government did so while they were heavily in debt or frequently made poor financial decision. That isn't the say all people with bad credit would do this, only that it is an indicator that it possibly may be a temptation since they know classified material may sell for high price. Lives are at risk so it makes sense for the government to protect this information by eliminating any potential risky person.
    – Dan
    Jun 13, 2018 at 13:24

One consideration would be the fact that someone with poor credit could be more likely to take advantage of an employer to improve their financial situation. Things such as cooking the books as an accountant, stealing employer property, sharing company secrets to competitors for monetary gain etc.

A person who is in a more stable financial position is less likely to be at risk for those behaviors.

  • 4
    The logic seems to make sense, but that's not evidence that it's actually true. Jun 12, 2018 at 15:25
  • Playing Devil’s advocate, the reverse could be true. A low-paid worker who has a nice car, nice holidays, etc., but no outstanding credit, would at last look a little suspicious to an employer for potential fraud, selling secrets, etc. Jun 12, 2018 at 15:52
  • 1
    It's very doubtful everyone with bad credit would do this. For example, a ER visit could easily put you in debt well past your means but otherwise you make sound financial decisions. Questions these institutions would have: did you attempt to pay it back? How long ago was it? Maybe you can pay half the ER bill or you attempted to pay back most of it but still can't.
    – Dan
    Jun 12, 2018 at 18:25

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