How Debt Can Hurt and Help Your Career

April 29, 2013

career manWhen we think of the harm that debt can do, we often just think about the way it can lead to higher loan costs – or the risk of being turned down for a loan.

However, debt can also have an impact on your career. Depending on the job you want, and the situation you’re in, debt can be a real hindrance. In other cases, though, a little debt can make sense.

Employers Checking Your Credit

It’s becoming increasingly common for some employers to check your credit as part of the screening process. Technically, employers aren’t supposed to look at your credit score. However, they can look at a version of your credit report.

Since the information in your credit report is used to calculate your credit score, employers can get a pretty good idea of your financial situation just from the information in your credit report. In some cases, your credit report might raise red flags. If you are having trouble making your payments on time, or if you have a very high amount of debt, employers might be reluctant to hire you.

If you apply for a job that requires security clearance, or if you are in a position to handle money, employers might worry that you could be prone to bribery or embezzlement if your credit history shows difficulty with your finances. It’s possible that an employer just decides the risk isn’t worth it.

You do have to give your permission for a potential employer to pull your credit report, though. However, refusing to provide consent could just mean that you have something to hide. Some employers might see your reluctance as an admission that something is wrong, and decide not to hire you.

Using Debt to Get Ahead

Debt isn’t all bad, though. In some cases, it can represent an investment in your future. Taking out a small loan so that you can take a class or earn a certification that will make you more marketable can make a lot of sense. It can also make sense to earn a different degree if you are switching careers, or if you want to see some advancement in your current job field.

You still have to be careful, though. Even so-called “good” debt can go bad. Weigh the cost of the education against what you hope to realistically earn after completing your course of study. If a $8,000 training course can earn a certification that results in a raise of $10,000 a year, then it can be worth it take the loan now, and improve your skill set. Even if you only get a raise of $4,000 or $5,000 a year as a result, it can still be worth it to get that sort of loan, just because of the lifetime earning potential.

Make sure that you aren’t getting additional education just for the fun of it. While it can be a matter of personal satisfaction and achievement to get a degree, or continue your education, consider the cost of going into debt. If you don’t have a way to pay for it through a higher income, think twice.

What do you think? Is debt sometimes a smart choice? Or is it always a burden? Leave a comment!


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Miranda writes about personal finance almost every day. An experienced freelance writer, she's covered your money online and in print from every angle and is always looking for new ones.

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One Response to How Debt Can Hurt and Help Your Career

  • Jay S. Fleischman

    Miranda, you forget one MAJOR issue and that’s the one involving wage garnishment. If you’ve got bill problems and the creditor sues, in many states that creditor can intercept and seize a portion of your paycheck to pay for the debt. Not only is that going to put a crimp in your personal financial health, it will also involve your employer finding out that you’re in debt. This causes some uncomfortable moments at the office (plus, if you’ve got a nosy payroll clerk with a big mouth then you’ve got to worry about the whispers in the hallways).