Can Too Much Debt Keep You From Getting a New Job?

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a professional personal finance blogger, and the owner of his own personal finance blog, He has backgrounds in both accounting and the mortgage industry.

When it comes to hunting for a job, we tend to concern ourselves with factors that are most closely related to the search itself. This includes preparing the most effective resume, developing winning interviewing techniques, having the right experience and credentials, and a list of convincing references.

But with background checks becoming ever more comprehensive, our efforts to land a job can be materially affected by personal factors, such as credit profile. It’s even possible that too much debt can keep you from getting a new job.

Why would employers care how much debt you have, and why would it be a factor in determining whether or not to hire you?


High debt levels affect credit scores – negatively!

Many, perhaps most employers today are pulling credit before making a job offer. The quality and volume of debt that you have are factors. The amount of money that you owe does affect your credit scores. This is most commonly demonstrated through credit utilization – the percentage of outstanding debt to available credit.

A high level on this calculation, especially above 80%, can have a negative effect on your credit score. That could bring your score down low enough that an employer might do a deeper review of your report, rather than assuming all is well.

Credit reports indicate the reasons for the given credit scores. Credit utilization is one of the primary components of your credit score, and this will be indicated as a reason for the low scores. If the score is low, the employer might scan your credit report to see exactly how much that you do owe, and determine it to be unacceptable.

Ironically, current debt levels can be a bigger detriment than a prior bankruptcy or foreclosure. While major negative credit events are in the past, a high level of debt represents an ongoing problem. An employer may see it as a complication that could affect your performance if hired.

Depending upon the employer, either the low credit score or the high debt level could be an obstacle to an employment offer. Employers likely have a certain range within which they consider both acceptable credit scores and debt levels. If you exceed those parameters, you may be declined for employment.


Too much debt could interfere with your ability to do your job

An employer might decide that the amount of debt you have to be so high that it will interfere with your ability to do your job properly. This is not an unreasonable consideration either. If you have a substantial amount of debt, it is likely having an effect on other areas of your life. In fact, a very high debt level could easily become the dominant factor in your life. That would most certainly have an effect on your ability to do your job.

Worry causes stress, and stress can interfere with your ability to do your job properly and efficiently. An employer may decide that you are not the right candidate for the job, particularly if there other qualified candidates with less substantially less debt. It’s simply one of those factors that could get in the way of the job search in a tight market.


High debt could indicate inability to manage finances

Even without knowing the reasons for your high debt level, an employer could conclude that you have an inability to properly manage finances. This can be an even bigger problem if you’re applying for a job that will involve budget responsibilities. The employer may decide that you’ll bring the same poor money management skills from your personal life into the job and the budget you will oversee.

A lot of people are in debt for reasons beyond their control, including medical debt, business failures, or taking care of sick or incapacitated relatives. If you your high debt levels are attributable to any of these factors, you might want to let the employer know in the interview. Absent that information, the employer may conclude you’re simply bad with money. That is the usual conclusion absent evidence of the contrary.


High debt could make you vulnerable to criminal activity

This is the darker side of high debt levels. They may see your high debt levels as a potential incentive to participate in criminal activity in order to pay off your debt. This could include openness to bribery, participation in financial scams, or even outright theft from the company itself.

This does not mean that all employers will view a high debt level as the potential for criminal activity. Much will depend upon the employer’s previous experience. If they have hired people in the past with high debt levels who have gone on to commit criminal activity, they will understandably be reluctant to do so again in the future.

Once again it’s very important that you’re proactive if you have high debt levels. If you know that the employer will run a credit check, volunteer the information even if you’re not asked. You should be prepared to disclose the reasons why, but you should also be willing to share any documentation you have that proves your point.

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About the Author Jacob A Irwin

Hi folks! My name is Jacob. I am the owner and operator of My Personal Finance Journey. I started this blog in January of 2010 and have enjoyed the journey ever since. Since finishing up graduate school in Virginia in 2014, I have been working in biopharmaceutical development in Colorado. You can read more about me and this site here​. Please contact me if you have any questions!

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Leave a Comment:

Kostas Chiotis says January 13, 2014

Well I don’t think that too much debt can keep you from getting a new job and there is no reason your boss to know financial situation however it can certainly effect your mood and increase your anxiety which could probably make you more desperate in finding a new job without being very selective…

    Kevin Mercadante says January 13, 2014

    Hi Kostas – I wish I could agree. Employers routinely pull credit reports, and review them in deciding whether or not to hire someone. Not all do, but many do. Debt level can be a factor, for all the reasons listed in the article.

      Kostas Chiotis says January 15, 2014

      Actually this could even help you get a job since if an employer knows your situation they will probably believe that you will try harder and be more productive since you will really need that job…

        Kevin Mercadante says January 16, 2014

        That’s an excellent counter view of credit and employment in general! Some employers do tend to prefer people who are encumbered, but it guarantees they’ll be productive. But each employer considers these factors individually. There is a point where a potential employee could be considered too deep in debt. For example, a person with $100,000 in revolving debt applying for a job paying $50,000. That employee’s mind may be on his debt more than on his job.

Mark Ross @moneysavingdude says January 14, 2014

I think too much debt can affect you from getting a job, but it could not really prevent you from getting one. Some employers might do some additional background check for their new applicants, but I don’t think it will get to the point that they reject him or her all because of his or her credit score.

    Kevin Mercadante says January 15, 2014

    Hi Mark – If that’s true then we have to ask why it is they even run credit reports at all. I’d like to believe that what you’re saying is true, but it’s unlikely they’ll run them then disregard what they contain. For example, I’m sure that a recent bankruptcy would be an issue in hiring a person into a job involving fiduciary responsibility. They may not say that they’re not hiring you because of this (which I think it’s illegal to not hire someone due to bankruptcy) but they can easily call the reason by another name.

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