How ATS Systems Work (and How to Optimize for Them)

What is an Applicant Tracking System?

An Applicant Tracking System (ATS) is software that automates the hiring process by scanning, parsing, and ranking resumes based on predetermined criteria. More than 98% of Fortune 500 companies use ATS platforms, and adoption continues growing among small and mid-sized businesses.

ATS platforms serve multiple purposes: they organize applications, filter candidates based on qualifications, track applicants through the hiring pipeline, and help recruiters manage high volumes of applications efficiently. For job seekers, this means your resume must be optimized for both software algorithms and human readers.

Understanding how ATS systems work is critical. Even the most qualified candidate can be filtered out if their resume isn't properly formatted for automated parsing. The good news? Optimizing for ATS doesn't mean sacrificing quality or creating a boring resume. It means following specific technical best practices.

How ATS Systems Parse Resumes

The Parsing Process

When you submit a resume, the ATS first attempts to parse (extract and categorize) the information. It looks for standard sections like Contact Information, Work Experience, Education, and Skills, then extracts relevant data points: job titles, company names, dates, degrees, and keywords.

The system converts your formatted resume into a structured database entry. If your resume uses non-standard formatting or section headings, the ATS may fail to categorize information correctly. Your impressive achievement might end up in the wrong category—or nowhere at all.

Modern ATS platforms use natural language processing (NLP) and machine learning to improve parsing accuracy. They can often recognize synonyms, understand context, and even correct minor formatting issues. However, relying on AI sophistication is risky. The safest approach is to format your resume for easy parsing from the start.

Ranking and Filtering

After parsing, the ATS ranks candidates based on keyword matching, required qualifications, years of experience, education level, and other criteria set by the employer. Resumes that meet threshold requirements are flagged for human review. Those that don't are often rejected automatically.

Ranking algorithms vary by platform and employer configuration. Some systems use simple keyword counts. Others employ semantic matching that understands related terms. Many allow recruiters to set knockout questions or mandatory requirements that automatically filter candidates.

ATS-Friendly Formatting Best Practices

File Format

Submit your resume as a .docx or .pdf file unless otherwise specified. Most modern ATS platforms parse both formats well, but .docx is often safer because it maintains text formatting without embedding it in images or unusual encoding.

Avoid .pages, .odt, or image files (.jpg, .png). These formats often can't be parsed correctly, resulting in automatic rejection.

If the application specifically requests a certain format, follow instructions exactly. Failing to follow simple directions is an immediate red flag.

Fonts and Typography

Use standard, professional fonts that ATS systems easily recognize:

• Arial
• Calibri
• Georgia
• Times New Roman
• Helvetica
• Trebuchet MS

Font size should be 10-12pt for body text and 14-16pt for headings. Anything smaller than 10pt is difficult to read; anything larger looks unprofessional.

Stick to one or two fonts maximum. Using multiple fonts creates visual confusion and increases parsing errors.

Section Headings

Use standard section headings that ATS systems recognize:

• Contact Information (or just your name as a header)
• Professional Summary or Summary
• Work Experience or Professional Experience
• Education
• Skills
• Certifications (or Licenses and Certifications)
• Projects

Avoid creative headings like "My Journey" or "Where I've Been." ATS systems may not recognize these as the Work Experience section, causing your employment history to be misclassified or omitted.

Formatting Elements to Avoid

Certain formatting choices confuse ATS parsers:

• Tables: Many ATS systems can't parse text inside table cells correctly
• Text boxes: Content in text boxes is often invisible to parsers
• Headers and footers: Information here may be ignored or cause parsing errors
• Images and graphics: ATS can't read text embedded in images
• Unusual symbols: Stick to standard bullets (• or -) and avoid special characters
• Columns: Multi-column layouts often scramble during parsing

Keep your layout simple and linear. A single-column format with clear section divisions is most reliable.

Acceptable Formatting

You can use these formatting elements safely:

• Bold for emphasis (company names, job titles)
• Italics sparingly
• Standard bullet points (•, -, or simple circles)
• Horizontal lines (sparingly, for section separation)
• Consistent spacing between sections

Keyword Optimization Strategy

Identifying Relevant Keywords

Keywords are specific terms the ATS is programmed to look for, typically pulled from the job description. To identify them:

1. Read the job posting carefully, noting repeated terms and phrases
2. Look for specific skills, technologies, certifications, and qualifications
3. Pay attention to required vs. preferred qualifications
4. Note both acronyms and spelled-out versions (SEO and Search Engine Optimization)
5. Identify industry-specific terminology

Create a keyword list from 5-10 job postings for your target role. Terms that appear frequently across multiple postings are especially important.

Incorporating Keywords Naturally

Keyword optimization doesn't mean stuffing your resume with every term from the job description. That's both obvious to human readers and potentially penalized by sophisticated ATS algorithms.

Instead, incorporate keywords naturally throughout your resume:

• Skills section: List relevant technologies, tools, and competencies using exact terminology from job descriptions
• Work experience: Weave keywords into achievement statements and job descriptions
• Professional summary: Include 3-5 high-priority keywords
• Projects and certifications: Use technical terminology consistently

Example of natural keyword incorporation:

"Led cross-functional team implementing Salesforce CRM, resulting in 34% improvement in sales pipeline visibility and 28% reduction in customer acquisition cost. Managed stakeholder engagement across sales, marketing, and IT departments."

This sentence naturally includes keywords like "cross-functional," "Salesforce CRM," "sales pipeline," "customer acquisition cost," and "stakeholder engagement"—all without sounding forced.

Matching Exact Terminology

ATS systems often look for exact phrase matches. If a job description says "project management," don't just write "managed projects"—use the exact phrase "project management."

If a posting mentions "stakeholder engagement" five times, use that exact phrase (not "engaging stakeholders" or "stakeholder communication") where truthful and appropriate.

Include both acronyms and full terms the first time they appear:

"Implemented Customer Relationship Management (CRM) system..." This ensures the ATS catches either search term.

Avoiding Keyword Stuffing

Some candidates create invisible text, list keywords in white font, or repeat terms excessively. Don't do this. Many ATS platforms detect these tactics and flag resumes for rejection. Even if the ATS doesn't catch it, human reviewers will.

Focus on strategic, authentic keyword use that demonstrates genuine qualifications.

Common ATS Parsing Problems

Dates and Formatting

Use consistent date formats throughout your resume. The ATS needs to parse employment timelines correctly to calculate years of experience.

Recommended formats:

• January 2020 - December 2023
• Jan 2020 - Dec 2023
• 01/2020 - 12/2023

Avoid:

• Mixing formats (Jan 2020 - December 2023)
• Using only years without months (can appear to hide short tenures)
• Ambiguous formats (12/01/20 - could be Dec 1 or Jan 12 depending on region)

Spelling and Typos

ATS systems typically don't auto-correct spelling errors. A typo in a key skill can mean the ATS doesn't recognize it as a match.

"Pyton" instead of "Python" won't register as a keyword match, even though a human would recognize the typo. Proofread meticulously.

Uncommon Job Titles

If your official title is unusual or company-specific, the ATS may not recognize it as relevant experience. You can address this with a clarification in parentheses:

"Happiness Engineer (Customer Support Specialist)"

This preserves your actual title while ensuring the ATS understands your role.

Testing Your ATS Compatibility

ATS Resume Scanners

Several free and paid tools can test how well your resume parses:

• Jobscan
• Resume Worded
• SkillSyncer
• Career Quill's Resume Analyzer

Upload your resume and a job description. These tools show you how well your resume matches the posting, identify missing keywords, and highlight parsing issues.

Review the parsed output carefully. Does the system correctly identify your work history? Are skills categorized properly? If not, adjust your formatting.

The Plain Text Test

Copy your resume and paste it into a plain text editor (Notepad, TextEdit). If the formatting becomes garbled or information is lost, the ATS will likely have similar problems.

This simple test reveals hidden formatting issues you might miss in a PDF or Word document.

ATS Myths and Misconceptions

Myth: ATS-Optimized Resumes Must Be Boring

False. ATS optimization means following technical formatting standards, not eliminating personality or strong writing. You can have a visually appealing, ATS-friendly resume by using clean layouts, professional fonts, and strategic formatting.

Myth: You Need a Separate "ATS Resume"

False. With proper formatting, your standard resume should work for both ATS and human review. Maintaining multiple versions increases the chance of errors and confusion.

Create one excellent resume that passes ATS screening and impresses human readers. The formatting advice above achieves both goals.

Myth: ATS Rejects Most Resumes

While it's true that many resumes are filtered out, this usually happens because candidates genuinely don't meet the requirements—not because of formatting alone. If you're qualified and follow ATS best practices, your resume will likely pass initial screening.

Myth: Creative Fields Don't Use ATS

False. Even design agencies, marketing firms, and creative companies often use ATS to manage applications. Don't assume you can skip optimization just because you're in a creative field.

Balancing ATS Optimization and Human Appeal

The best resumes work for both algorithms and people. Here's how to achieve that balance:

Lead with Impact

Start each bullet with strong action verbs and include quantifiable results. This appeals to human readers while naturally incorporating keywords for ATS.

Use Clear Hierarchy

Bold headings, consistent spacing, and logical organization make your resume scannable for both humans and software.

Strategic White Space

Don't cram your resume with text to fit in more keywords. White space improves readability for humans and can actually help ATS parsing by creating clear section boundaries.

Customize Strategically

Tailor your resume for each application, but focus on swapping in relevant keywords and emphasizing applicable experience—not reformatting the entire document.

Beyond the ATS

Remember that passing the ATS is just the first step. Your resume still needs to impress the human recruiter or hiring manager who reviews it after it passes automated screening.

Don't optimize so heavily for keywords that your resume becomes a lifeless list of terms. Maintain compelling achievement statements, quantifiable results, and clear evidence of impact.

The goal isn't just to get past the ATS—it's to land an interview. A keyword-stuffed resume might pass initial screening but fail to generate interest from actual decision-makers.

Final Recommendations

1. Use a simple, clean single-column format
2. Stick to standard fonts and section headings
3. Submit as .docx or .pdf unless otherwise specified
4. Mirror keywords from job descriptions naturally
5. Test your resume with ATS scanning tools
6. Proofread meticulously—typos break keyword matching
7. Include both acronyms and spelled-out terms
8. Avoid tables, text boxes, headers, footers, and images
9. Use consistent date formatting
10. Balance ATS optimization with human appeal

ATS optimization isn't about gaming the system—it's about ensuring your qualifications are properly recognized and evaluated. Follow these guidelines, and your resume will successfully navigate automated screening while still making a strong impression on human reviewers.