How ATS Systems Actually Work: A Complete Guide

You've spent hours perfecting your resume. You've tailored it to the job description, quantified your achievements, and proofread it three times. You click "Apply" feeling confident.

Then... nothing. No rejection email. No interview request. Just silence.

Sound familiar?

Here's the uncomfortable truth: up to 75% of resumes never reach human eyes. They're filtered out by software before a recruiter even knows you exist. That software is called an Applicant Tracking System, or ATS.

Let's pull back the curtain on how these systems actually work, and more importantly, how to make sure your resume gets through.

What Is an ATS (And Why Do Companies Use Them)?

An Applicant Tracking System is software that manages the entire hiring pipeline. Think of it as the recruiter's command center: it posts jobs, collects applications, stores candidate data, and yes, filters resumes.

Why do companies use them?

The math is simple. A single job posting at a mid-sized company might receive 250+ applications. At large companies like Google or Amazon, that number can hit thousands. No human can read all of those resumes.

So companies use ATS to:

• Collect and organize applications in one place
• Parse resumes into searchable database fields
• Filter candidates based on keywords, experience, and qualifications
• Track candidates through interview stages
• Stay compliant with hiring regulations (EEOC, OFCCP)

Popular ATS platforms include Workday, Greenhouse, Lever, iCIMS, Taleo, and BambooHR. Each has slightly different parsing logic, but they all work on the same basic principles.

How ATS Parsing Actually Works

When you submit your resume, the ATS doesn't "read" it the way a human does. Instead, it parses it, extracting specific pieces of information and slotting them into database fields.

Here's what happens in the first few seconds:

Step 1: Text Extraction

The ATS first converts your resume into plain text. This is where things can go wrong immediately.

What works:

• .docx files (Microsoft Word)
• .pdf files created from text (not scanned images)
• Plain .txt files

What breaks:

• Scanned PDFs (the ATS sees an image, not text)
• Complex tables and columns
• Headers and footers (often ignored entirely)
• Text boxes and graphics
• Fancy fonts that don't render

Step 2: Section Identification

Next, the ATS tries to identify sections of your resume:

• Contact information
• Work experience
• Education
• Skills

It looks for common headers like "Experience," "Education," "Skills," and "Summary." If you get creative with headers ("Where I've Made Impact" instead of "Work Experience"), the ATS might not understand what it's looking at.

Step 3: Entity Extraction

This is where it gets interesting. The ATS attempts to extract specific entities:

Here's the catch: parsing isn't perfect. If your resume layout is unusual, the ATS might extract the wrong information, or miss it entirely.

Step 4: Keyword Matching

Once your resume is parsed, the ATS compares it against the job description. It's looking for:

• Hard skills: Python, Excel, Project Management, Financial Modeling
• Soft skills: Leadership, Communication, Problem-solving
• Certifications: PMP, CPA, AWS Certified, Six Sigma
• Job titles: Product Manager, Senior Developer, Marketing Director
• Industry terms: Agile, B2B, SaaS, ROI, KPIs

Some systems do simple keyword counting. Others use more sophisticated matching that understands "PM" might mean "Project Manager" or that "JavaScript" and "JS" are the same thing.

Step 5: Scoring and Ranking

Finally, the ATS assigns your resume a score based on how well it matches the job requirements. This might be:

• A percentage match (78% match)
• A tier ranking (A, B, C candidates)
• A pass/fail filter (meets minimum requirements or doesn't)

Only resumes above a certain threshold get forwarded to recruiters.

Why Good Resumes Get Rejected

Understanding the parsing process reveals why perfectly qualified candidates get filtered out:

1. Formatting That Breaks Parsing

The problem:

Your beautifully designed two-column resume looks great on screen, but the ATS reads it as a jumbled mess.

What happens: The ATS reads left-to-right, top-to-bottom. In a two-column layout, it might read:

"Senior Marketing      5 years experience
Manager               Led campaigns..."

Instead of:

"Senior Marketing Manager
5 years experience
Led campaigns..."

The fix: Use a single-column layout. Save the fancy design for roles where you'll hand your resume directly to someone.

2. Missing Keywords

The problem:

You have 8 years of experience managing teams, but the job description says "leadership" and you never used that exact word.

What happens: Simple ATS systems do literal keyword matching. "Team management" ≠ "Leadership" in their logic.

The fix: Mirror the language in the job description. If they say "leadership," use "leadership." If they say "cross-functional collaboration," use that exact phrase.

3. Graphics and Images

The problem:

You included a skills chart showing your proficiency levels with nice progress bars.

What happens: The ATS can't read images. Your carefully rated "Python: ████████░░ 80%" becomes invisible.

The fix: List skills as plain text. You can add proficiency levels in parentheses if needed: "Python (Advanced), SQL (Intermediate)."

4. Non-Standard Section Headers

The problem:

Your creative headers ("My Journey" instead of "Experience") seemed more engaging.

What happens: The ATS doesn't recognize non-standard headers and may categorize that content incorrectly, or ignore it.

The fix: Use standard headers:

• Work Experience (or Professional Experience)
• Education
• Skills
• Summary (or Professional Summary)
• Certifications

5. File Format Issues

The problem:

You saved your resume as a PDF from Canva or Google Docs.

What happens: Some PDF converters create files that look perfect but contain scrambled underlying text. The ATS extracts gibberish.

The fix: Test your PDF by copying all text (Ctrl+A, Ctrl+C) and pasting into Notepad. If it's garbled, recreate in Word and save as PDF directly.

How to Optimize Your Resume for ATS

Now that you understand how ATS works, here's a systematic approach to optimization:

1. Start with a Clean Format

✅ Single column layout
✅ Standard fonts (Arial, Calibri, Georgia, Times New Roman)
✅ Clear section headers
✅ Consistent date formatting (MM/YYYY)
✅ No tables, text boxes, or graphics
✅ Margins at least 0.5 inches

2. Match Keywords Strategically

Don't just stuff keywords. Integrate them naturally:

Before:

Managed team projects and deliverables

After:

Led cross-functional team of 8, managing project deliverables using Agile methodology. Achieved 95% on-time delivery rate.

The second version naturally includes: leadership, cross-functional, team, project management, Agile, deliverables. All potential keywords.

3. Use Standard Job Titles

If your actual title was "Customer Happiness Ninja," translate it:

In your resume:

Customer Success Manager (internally: Customer Happiness Ninja)

This preserves honesty while ensuring the ATS recognizes your role.

4. Include a Skills Section

Create a dedicated skills section with keywords from the job description:

Skills: Project Management, Agile, Scrum, JIRA, Stakeholder Management, Budget Planning, Risk Assessment, Team Leadership, Cross-functional Collaboration

This gives the ATS an easy keyword hit while remaining human-readable.

5. Quantify Everything

Numbers parse cleanly and impress humans:

Before:

Improved sales performance

After:

Increased regional sales by 34% ($2.1M) within 18 months through strategic account management

6. Test Before You Submit

Use an ATS checker tool to see how your resume parses. Look for:

• Are all sections correctly identified?
• Is your contact information extracted properly?
• Are key skills being recognized?
• What's your match score against the job description?

The Human Element

Here's something important to remember: passing the ATS is just step one.

Once your resume reaches a recruiter, it needs to impress a human in about 7 seconds. That means:

• Clear, scannable formatting
• Achievements that jump off the page
• A compelling narrative
• No spelling or grammar errors

The best resume strategy optimizes for both machines AND humans.

What ATS Can't Measure

While you're optimizing for algorithms, remember what they can't evaluate:

• Cultural fit - Your personality and work style
• Growth potential - Your ability to learn and adapt
• Soft skills in action - How you actually collaborate
• Context - Why you made certain career moves
• Passion - Your genuine interest in the role

These come through in your cover letter, interview, and references. Don't sacrifice your authentic story just to game the system.

Key Takeaways

1. ATS exists to manage volume, not to reject good candidates, but poor formatting causes collateral damage
2. Parsing is imperfect. Simple, clean formats parse most reliably
3. Keywords matter, but context matters more. Integrate them naturally
4. Always test your resume before submitting to catch parsing issues
5. Optimize for humans too. The ATS is just the gatekeeper

The job market is competitive enough without letting software filter you out unfairly. Now that you understand how ATS works, you can make sure your qualifications actually reach the people making hiring decisions.

Want to see how your resume performs? Try ResumeFast's ATS Checker to analyze your resume's compatibility and get specific recommendations for improvement.