If you’re like most, chances are you probably have some bills you haven’t paid on time.
This can affect your credit rating, and you might even be wondering if a bad credit rating could affect your chances of being employed as a nurse.
Can Nurses have bad credit?
Yes. Generally speaking, bad credit will not affect a nurse’s chance for employment. The exception would be if a nurse is applying for a finance or management position (or a position requiring a security clearance) then a bad credit rating may affect their chances of being hired.
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Will Bad Credit Affect Your Chances of Becoming a Nurse?
The short answer is that typically, having bad credit won’t decrease your chances of getting a job as a nurse once you graduate.
There are some caveats though.
While a bad credit rating normally doesn’t affect your chances of being employed as a nurse, it could affect your chances of being employed in another type of health position.
For example, if you’re applying to a health position that involves finances or management, a bad credit rating might affect your chances of being employed.
It’s certainly more common these days for credit ratings to be checked by employers, so applying for a job where fiscal responsibility is expected might not be ideal if you have a history of bad credit (source).
In general, having some dents in your credit rating should not hurt your chances of becoming employed as a nurse once you graduate.
That’s the good news out of the way.
What Causes Bad Credit?
Your credit score is a measure of how likely a bank is to lend you money.
From the bank’s narrow perspective, the lower your credit score is, the less likely you are to pay back your loan.
In short, they’ll avoid lending money to you because your low credit score poses an increased risk to them.
On the flip-side, someone with faultless credit will have lenders who are more than willing to lend them money.
It may seem unfair, but your credit rating follows you around.
It follows you from job to job and from home to home.
It’s something that hangs over your head.
The problem is your credit rating may not be an accurate reflection of who you are or your circumstances, but many companies now perform credit checks before hiring.
So, what causes a person to have a bad credit rating?
Consider the following:
1. Not Paying Credit Cards on Time
Credit cards are everywhere and they’re easy to apply for and receive.
Credit cards are so easy to get that many consumers have fallen prey to debt traps (source).
What are debt traps?
A situation in which paying off debt is very difficult or impossible for the borrower.
It may be cynical, but for many, it’s the harsh truth.
One of the biggest contributors to a poor credit score is not paying your credit card bills on time.
If you miss a payment, you’ll gradually be building a poor credit history and this will affect your credit rating.
Likewise, if you’re simply paying the minimum each month and not paying anything down on the principle, you’re also more likely to build a poor or questionable credit history.
The problem is that your credit rating may not be an accurate reflection of who you are or your circumstances, but many companies now perform credit checks before hiring.Thomas Uzuegbunem, BSN, RN
2. Charge Off Accounts
If you don’t pay your credit card charges at all, the bank (or creditor) will place it in a status called charge off (source).
If this happens, your credit rating will take a big hit.
What are charge-off accounts?
If a creditor has tried and is unsuccessful in getting you to pay your bill they will close the account and in your credit report they’ll list that account as a charge-off. It just means the creditor has no hopes they’re going to get you to make good on the account.
3. Loan Defaulting
If you have a personal loan from the bank, not paying it is called defaulting on the loan.
Banks hate this and it will affect your credit score accordingly.
4. House foreclosure
A house foreclosure is what happens when a homeowner fails to pay their mortgage.
Unfortunately, it’s also a legal process that happens and the end result is the homeowner loses all rights to the home (source).
If you default on your mortgage repayments, the bank will place your home into foreclosure so they can recoup at least some of the money owed.
Clearly, this is going to be terrible for your credit rating.
5. Filing for Bankruptcy
Lots of people file for bankruptcy each year, though certain types have been made more difficult.
For many people, bankruptcy is a last resort when they’re crushed by their debts, but banks also hate it when anyone files for bankruptcy.
From their perspective, it means they’ll never be able to recoup their losses.
Accordingly, this has some of the worst outcomes for your credit rating.
The Consequences of Having Good or Bad Credit
Because your credit rating is a measure of how big a risk you are from a bank’s perspective, a bad credit rating means lenders are less likely to lend money to you.
They don’t want to lose money on their investment in you, so they’ll take your credit rating into account.
Sometimes, a company might still lend to you even if you have a credit score on the low side.
They might charge you a security deposit (for example when you get a phone). Or they might charge you a higher interest rate to offset the financial risk.
On the other hand, when you have good credit, lenders will almost fall over themselves to loan you money.
If you pay all your bills on time and pay off your debts, a lender will see you as a good risk to take.
How to Fix Your Credit
If you happen to have a bad credit score, don’t despair.
There are steps you can take to fix it and get to a place of good credit.
It may take time, but taking small steps will make it easier.
With every successful step taken, it gets slightly easier to repair your credit.
Here are some things you can do to get yourself on the road to a good credit rating:
1. Find Out Your Credit Score
To repair your bad credit, it’s useful to know what your credit report says about you.
There are a number of credit bureaus that keep track of credit ratings.
You can approach each one to find out what your credit report is.
The three major credit bureaus are Equifax, Experian and TransUnion.
Alternatively, you can try a free credit report site, such as Credit Karma.
2. Review and Dispute Negative Credit Marks
It’s worth taking the time to go through your credit report carefully and disputing any negative credit marks that seem unfair.
Please note your credit report is not the same thing as your credit score.
Your credit report will include your credit score. But your credit report is the history of information collected about your credit usage.
Your credit score is the number you’re probably familiar hearing people talk about.
How they come up with the number is a proprietary method that encompasses your credit history.
Sometimes, you might get more than one bad credit mark from the same company for the same thing, further lowering your score (source).
Other times, you might have received a negative mark for something that was completely out of your control, like having a debt go to a collection agency when you were in the hospital and unable to pay it on time.
Getting rid of these negative marks will help to improve your credit rating.
3. Increase Credit Limits
The closer you are to having maxed out your credit card, the lower your credit score.
If you have some extra credit available, you can increase your credit limit even further.
This improves your credit score.
4. Open a New Card
This is a tricky one if you’re prone to spending, but if you’re serious you can open a new credit card.
Just make sure you use one with no fees.
Rather than spending anything on it, just keep it around to improve your credit score by making it look as if you’re responsible enough not to spend.
5. Pay Down the Debt
The most obvious way to improve your credit score is to pay down the principle on time every month.
Pay as much as you can above the minimum and just keep hacking away at the debt.
Paying on time and paying down debt will take time, but it will make you more financially stable and improve your credit score.
How Long Does It Take to Fix Your Credit?
If you’re trying to fix your credit it typically takes about three to six months to make a positive impact (source).
But this really depends on how deep your debt is and what you’re doing to fix it.
Resolving disputes can take months, for example.
If you have a large debt and you’re slowly paying it down each month in small chunks, it’s going to take a lot longer to get to a position of good credit.
Frequently Asked Questions
1. Is Credit Score a Measure of Wealth?
A credit score is not a measure of wealth it’s a measure of a person’s interaction with debt.
What does that mean?
It means someone with a 300 credit score (or no credit score) could be wealthier than someone with an 850 credit score.
Credit Score Ranges
|Your Credit Score||Your Rating||The % of People With That Score|
This table was sourced from Experian.
In answer to the question: can nurses have bad credit?
The good news is nurses can have bad credit.
However, it’s worth remembering that an employer may do a credit check.
The last thing to remember is that even if your employer doesn’t do a credit check there’s a lot of benefit to making sure you have a good credit score.
Look below for some of our other articles on personal finance for nurses.