Canada has been in a pandemic recession for a year hit the students and marginalized groups particularly tough, and the end is not in sight yet. It prevents many graduates and young people from finding employment.

It has also hampered your ability to save for tuition and pay off existing student loan debt. While the federal government has provided some debt relief for students, many people with student loans will fall further into dire straits before the economy returns to normal.

But what is less well known is that these two problems are connected: Student loan debt can also prevent students from getting a job. Accumulated debt, such as that owed to Ontario Student Assistance Program (OSAP) late or missed payment – a low credit score or a max credit card can negatively affect your chances of being hired.

Knowing what employers look for in your financial history, and how to restore your credit if there are blemishes in your history, can be key to not letting debt control your life.

Credit Check Careers

An increasing number of employers, including the Government of Canada and many in the financial services industry, are interested in the credit history of potential new hires. Requesting credit reports, or “financial inquiries,” as employers call them, has become common practice.

Lower Ontario Consumer Reporting Act, employers have a “permissible purpose” for requesting an applicant’s credit report. However, employers can only request a candidate’s credit history if they submit a conditional offer of employment contingent on a credit check and have obtained a signed, informed consent.

Pre-employment credit checks must be done in good faith, relevant to the position the candidate is applying for, comply with all privacy laws, and must not be used in a discriminatory manner.

Companies requesting a candidate’s credit history are not only interested in verifying the identity, address, and employment history of the applicant, but also in reviewing total debt levels, type of debt incurred, payment history, and any delinquent account that may have been recorded. on the credit report.

Recruiters seek to maximize talent and minimize risk. Some hiring managers see poor credit history as a sign of disorganization, mismanagement, or failure to adhere to contractual agreements. Employers also recognize that personal financial stress could interfere with an employee’s performance and productivity.

Excessive debt can also be interpreted as a form of financial trouble that can lead to employee theft or fraud, including misappropriation of cash or credit, theft of merchandise, payroll fraud, and internal data breaches.

Generation debt

TO new study from Ontario debt relief consultancy Hoyes, Michalos & Associates Inc., found that 20.4 percent of all bad debtors in 2020 had some student debt. This number has been growing steadily, rising from 19% in 2019, 17.6% in 2018 and 15.1% in 2017. Furthermore, the study found that a growing number of young borrowers, particularly those aged 18 At age 19, they are taking high-interest, high-fee, high-risk payday loans.

Similary, a 2019 study from Credit Karma which examined the credit reports of more than 170,000 Canadian Credit Karma members found that the average student loan debt among Toronto residents was nearly $ 21,000, the highest average in all of Ontario.

With respect to University of Toronto graduates specifically, the 2018-2019 average alumni default rate on federal and provincial government student loans was 2.2%. However, the rate was higher in certain programs.

For example, graduates of the U of T forestry program experienced a 9.1% noncompliance rate, graduates of the fine and applied arts program experienced a 3.9% noncompliance rate, and graduates of other programs from the College of Arts and Sciences experienced a default rate of 3.7 percent.

These numbers are expected to worsen due to COVID-19.

How do I fix my credit?

The bottom line is that today’s employers are thinking about their results when evaluating a new graduate’s job application. Be prepared for a credit check, make sure you know your credit history, and make sure the information on your credit report is accurate.

You can contact Equifax or TransUnion, Canada’s two major credit bureaus, to request a free credit report. The Government of Canada recommends that you check your credit history with more than one credit bureau, as each may have different information and methods to track your credit.

If you have defaulted on your OSAP debt, you may be eligible to apply for the Ontario Student Loan Rehabilitation Program. If your Canadian student loan payments exceed your means, you may qualify for the Payment assistance plan.

Pandemic or not, how you manage your student debt is important to prospective employers, regardless of whether it’s a government loan or a personal bank. If you are having difficulty with payments, be upfront about your credit history with a potential employer and explain that you are taking steps to rebuild your credit. Your potential employer will appreciate your good old fashioned honesty and will take note of it.