Rightly or wrongly, your Credit history is becoming an increasingly important factor in your life. It’s not just about applying for credit anymore; now even your car insurance company may be looking at your credit report when underwriting your application. The data shows that people with good credit tend to be better drivers with fewer accidents than those with poor credit. Insurers have taken notice.

And so have employers. According to the Society for Human Resource Management, some 47 percent of employers do conduct a credit check on at least some job applicants, and 13 percent conduct a background check on all of them.

That’s going to make it tough on people who have been out of the work force for an extended period of time: Obviously, if you’re out of work, it makes it tough to keep paying your bills on time.

What jobs are most likely to ask for a credit check? Any job that involves you handling large amounts of cash, jobs that require you to oversee a budget, and jobs that require a security clearance. This includes law enforcement, some military jobs, jobs with defense contractors, and anything in the intelligence services, such as the CIA, DIA, etc. Some states, however, such as Illinois, restrict employers from using credit reports as a hiring criteria in some circumstances.

Few employers need or expect a credit score of 800 or more for a job. A 30-day late payment here and there isn’t going to hurt you.

But there are some credit issues you definitely want to avoid:

Maxed credit. If your credit report shows you running all your credit cards flat-out, and you are maximizing all your lines of credit, this shows employers you are having trouble living within a budget. The key metric is your credit utilization ratio. 100 percent is bad. Try to keep that ratio below about 25 percent, to qualify for the best loans.

Liens. If you have a lien against you, it shows that for whatever reason, you didn’t pay an obligation, and you let things get so bad that the creditor had to go to court against you. To avoid them, stay in close touch with your creditors, and pay them what you can, even if it’s less than the full amount owed. Few creditors will file a lien if you are at least paying them something reasonable.

Foreclosures. These aren’t pretty, but they don’t represent the same black mark on your credit report that they used to – simply because so many of us know good people who have gotten over their heads with a house. Nevertheless, it’s still a ding against you, and you may want to be prepared to answer questions about the foreclosure during the interview or clearance adjudication process.

Bankruptcy. These are still something to be pursued as a last resort. A recent bankruptcy can make it difficult to get or keep a job requiring a top secret clearance, for example, or certain jobs in the financial services industry.

What’s more, while most negative credit information stays on your credit report for only seven years, bankruptcies can remain on your report for as long as 10 years. Worse than that, when you apply for many jobs, they don’t ask “have you declared bankruptcy in the last 10 years.” They ask, “have you ever declared bankruptcy?
Old bankruptcies aren’t a deal killer. But a lack of bankruptcies can serve as a tiebreaker between you and an equally qualified candidate.

So what can you do?
Well, just like you try to iron your shirt and straighten your tie before you go to an interview, you should pay attention to dressing up your credit report, too, prior to hitting the job trail.

Pull a report on yourself. While employers have to pay money to pull a credit report on you, federal law entitles you to a free credit report on yourself from each of the three major credit bureaus: Experian, TSR, and Equifax.

Go over your credit report and find anything inaccurate. A significant number of credit reports do contain significant errors, thanks to everything from sloppy clerks to identity theft. Notify the credit bureau about each inaccurate entry in writing. By law, they have 30 days to correct the information, or confirm that it is accurate.

For more information on disputing an item in your credit report, including a sample dispute letter you can send, visit this site from the Federal Trade Commission.

Pay up anything delinquent. If everything is current, you are in a much better position than if you have delinquencies on your report.

Settle. If you are underwater, but you have a lump sum of cash to work with, consider making a settlement offer with your creditor. Many times they will take a smaller lump sum and agree to mark the account “settled in full” on your credit report rather than try to continue to collect on you. “Settled in full” doesn’t look as good as “paid in full,” on your report. But it’s a lot better than a delinquency or default status.

What not to do.
Don’t run out and close accounts thinking you will lower your credit score. According to the Fair, Isaac Corporation, all this does is drive up your credit utilization ratio – and lower your overall credit score.

Also, if you must close an account, close the newest ones first. The length of your credit history is one of the factors that goes into calculating your credit score. The longer the relationships you have, the more weight they have in your report. Nurture your longstanding credit relationships.