College grades certainly affect your job prospects. The better your college grades, the greater your chances to find a good employer, and vice versa. All the tier-one companies such as IBM, Google, Microsoft etc. give lot of importance to academics during selection.
It also depends, whether you have applied to an entry level job, or to a job that requires prior experience. If you already have prior experience, your college grades do not really matter much. It might be just one of those cutoff factors that accounts to 5% of all the factors.
If you are a fresh graduate with no job experience, you would be judged based on your grades in college. This is reasonable in a way – if you have no work history, how do I know how good you are, short of calling you for an interview?
Usually companies set a cut off score below which they would ignore your resume. Typically cutoff score would be 60% or above. (60% is equivalent of Grade points 2.4 on scale 4).
If you do not have college percentage above 60%, it is time for you to earn some certifications or acquire extra skills to catch up. But, never fake your grades. Companies strictly follow their selection criteria. They would not hesitate to fire you in case they get to know about your real grades. Tips to explain poor grades in an interview.
I heard of a guy with college score of 59.9% who was fired and blacklisted just because he fell 0.1% short of company’s criterion of 60%. So never take chances and avoid such embarrassing situation(getting fired).
Three things that should not be asked:
About the Author: Sridhar Jammalamadaka is the Editor of Interview Mantra. He is a student pursuing masters in International Institute of Information Technology. With over 4 years of IT experience, he is obsessed with software programming and computer technologies. He loves to see a software come to life in its development life cycle. He is a person who defies "mob mentality" and a deeply spiritual and a strong believer of moral values and righteousness. Through this website, he wishes to gather a large community of aspiring engineers, entrepreneurs and professionals from all parts of the globe. You can connect with him on Facebook - http://www.facebook.com/sridhar.j 
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