Jeffrey Slebodnick was hired last summer to work as an adjunct professor at a technical college.
He had a master's degree, excellent recommendations, and no criminal record.
"I was given four classes and I was excited to start the term," said Slebodnick, 47, from Perry, Mich. who teaches geography.
"But a week after I was offered the job I got a call asking if I had any student loans, which I did, and when I planned on paying them," he said.
Slebodnick says he was told he would not be allowed to start work at an ITT campus in Michigan, because a credit check revealed he had some $50,000 in outstanding student loans and had recently declared bankruptcy.
"He told me they wouldn't hire someone who defaults on student loans. It was a shocker to get that phone call and get those classes pulled from me."
Once just the domain of the federal government, banks and financial-service institutions, an increasing number of companies are screening potential employees' credit histories, trying to glean from the way candidates manage their personal finances insights into their character, integrity and work habits.
It's increasingly likely that a checkered financial past can cost you a job opportunity. This doesn't sit well with consumer advocates and was not addressed in the most recent credit refirm legislation passed by Congress.
"There are many reasons someone's credit might be bad including identity theft," said Margot Saunders a lawyer at the National Consumer Law Center. "It's not completely unfair to use credit screening in all respects. You would want to know if the person you're hiring to be a treasurer is deep in debt. But why do you need to know if the person is digging ditches or handling computers? There has to be some sort of standard."
Various factors, from student loans to a recent divorce, can affect a person's credit history and as a result hurt their chances at finding a job, experts told ABCNews.com.
In 2004, some 35 percent of American companies were checking potential employees credit histories, said Matt Fellowes, director of the Pew Safe Banking Opportunities Project.
"It is safe to assume that the figure has gone up substantially, given the massive growth rate and how hard the credit bureaus are advertising," he said. "Around half of all companies are likely to run credit checks."
There is a good deal of information potential employers can glean from an applicant's credit report, said Steven Williams, director of research at the Society for Human Resource Management.
A credit report includes an individual's credit history – the record of how he has borrowed money and paid in back -- as well as personal information employers use to confirm an applicant's identity such as a social-security number.
"There are several reasons why an employer wants to look at credit history, but the biggest reason has to do with responsibility," said Williams.
"Credit history gives employers sense of how responsible someone is. It shows if you pay your bills on time, if you're not taking out too much debt. It is one indicator of how responsible you are, and the assumption is that if you're responsible when it comes to your own money it will flow over, and you'll be responsible with company's money," he said.
In 2001, Slebodnick took $25,000 in student loans to pay for his master's degree. He took another $15,000 for a doctorate he never finished.
In five years that $40,000 became $55,000 after "interest and penalties." He says he cannot get a job as a full professor because he never earned his Ph.D. and so now earns $18,000 to $26,000 a year by teaching part-time.
He lives with his mother and despite declaring bankruptcy last year, could not get rid of his student loan debt. The federal government continues to garnish his wages to repay his loan.
But Slebodnick says his credit history has nothing to do with his ability to do his job, nor should it reflect on his trustworthiness.
"I'm a good teacher. The government is already taking care of getting its money, so these people should not have a problem with me," he said.
Traditionally, companies checked the credit histories only of those employees with access to the firm's finances or proprietary information.
"Companies want to know if there are outside forces trying to collect money from you before they give you direct access to their cash or information. If a collection agency is trying to get its $10,000 from you, a company might not want to put in front of its cash," said John Ulzheimer, president of consumer education at the credit information and personal finance Web site credit.com.
The federal government has long used credit histories as a part of its security background checks, to ensure potential employees were not so saddled with debt that they could potentially be blackmailed or bribed.
The credit reports, which companies can access, experts told ABCNews.com, should not be confused with credit scores, which companies cannot obtain.
Though much of in the information contained in a credit report goes into a credit score, companies by law are not allowed view an applicant's credit score.
A credit score is a numbered ranking based on a statistical analysis of one's credit history. The three major bureaus that track credit histories and crunch scores – Equifax, TransUnion, Experian – are not allowed to sell or distribute scores to companies for hiring purposes.
Credit scores fluctuate monthly based on the level of debt and how much time it takes to pay off credit cards. Companies are barred from using the number to keep them from setting a bar, say a score of 700, and then not hiring someone who generally has good credit but because of the date in his monthly cycle has yet to pay his bills and is therefore temporarily under the score limit the employer is using.
People who have little credit built up -- students, young people, the poor – are also at risk of companies using their credit histories against them, even though a short history may not be a predictor of future results, said Fellowes.
Job seekers can take a proactive approach to ensuring their reports are as clean as possible when looked at by prospective employers, said Ulzheimer.
Anyone can access their credit history for free from each of the bureaus once a year and employers must obtain permission from the applicant to access his history.
"If you're in the market for job – especially if you're applying for a finance job, a broker, someone handling medical billing records -- assume employers are going to do a credit check as part of the screening," said Ulzheimer.
He recommended ordering your report in advance of the interview to ensure it "is accurate and paints and flattering picture." The bureaus are required to verify and correct incorrect information when brought to their attention.
"Make sure your ID info is accurate – date of birth, social security number, address. Make sure there is not negative debt that's inaccurate. Check that any recorded collections, past due credit card bills and large amounts of credit card debt are all accurate," he added.
The reports are based on your previous month's statement, so you may have paid off your debt but it is not reflected in the report.