Falling behind on your credit card payments, defaulting on an auto loan or losing your home to foreclosure could cause you to be turned down for a job.

A new study by the Society for Human Resource Management found 42% of companies that do background checks on job applicants are pulling credit histories to see if the applicants pay their bills on time.

That's up from 35% of employers in 2003 and just 19% in 1996.

Why do employers care?

Some think a bad credit history demonstrates a lack of judgment or character that can carry over to the workplace.

Others worry that job applicants with lots of unpaid bills are more likely to steal from the company, especially if the work involves handling cash.

That's not necessarily true.

An Eastern Kentucky University study conducted in 2003 found no clear connection between job performance and an employee's personal financial history.

Job applicants also can have a damaged credit history because of an illness or layoff that doesn't reflect their ability to be a good employee.

Laws to limit employment-related credit checks are under consideration in several states, including Hawaii and New York.

But for now, a credit check is perfectly legal as long as the applicant is informed it's being done, and candidates can be turned away based on what that credit history reveals.

If your credit is less than perfect, find out what goes into your credit score and the 7 things you can do to improve your credit score.