A recent post on CareerSolvers about credit checks reminded me of a post I’ve been meaning to write about this topic. Having been in the recruiting field for many years, I can’t tell you the number of times I encountered a perfectly qualified, professional and competent candidate for my open position only to have them kicked out of the running because of their credit history. Then, one of two things happens. The candidate is either completely surprised by the result of their credit check or with a mix of anger and desperation, they beg for advice on how to get around their poor credit.
Listen, credit checks are becoming more and more prevalent as a price of entry to employment, particularly in the accounting/finance fields. Regardless of how “clean” you believe your credit score/history to be, double check it before you apply for a job. Why? Because an astonishing 79% of all credit reports contain mistakes (says U.S. Public Interest Research Group). If your credit report is one of them, it’s best to find out ahead of time and fix it before it deters your job search.
If you are struggling with poor credit score or debt issues, accept that some employers have a black and white policy when it comes to credit checks – you don’t “pass,” you won’t get hired. On the other hand, many employers look at credit history as only one of many factors when considering you for employment. These are the employers that will appreciate an honest, well-prepared explanation of your circumstances. This can go a long way in overcoming the credit history hurdle.
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I have owned a business, have recruited employees for my business, and now research HR issues. One thing is for certain. Credit checks should NOT be used in employment decisions.
You stated the number of times that you have encountered a perfectly qualified, professional and competent candidate for your open position only to have them kicked out of the running because of their credit history. You are supposed to select candidates based on "job related criteria." Credit history is NOT job related.
I have never used it in my past businesses, and I would NEVER use it in making ANY employment decisions. Employment decisions must be based on whether the person can perform the job. What does a person's credit history have to do it that? It is discriminatory!
Posted by Nick Roy on September 22, 2006 6:10 PM
Employers need to be educated that you do not use credit checks in making employment decisions. Job seekers are applying for a job. They are not applying for a loan. Employment decisions MUST be JOB RELATED.
Posted by Nick Roy on September 22, 2006 7:02 PM
First, let me say that in light of the corporate scandals of the last decade, I can fully appreciate the decision by employers to scan a candidate's credit history for certain positions. Positions of concern should involve finance and corporate trust (auditing, AR/AP, etc.).
However, the biggest obstacle to credit history being utilized as a tool for trustworthiness screening is the inherrent inaccuracies and, more recently, blatant criminal activity associated with credit reporting.
As a victim of major identity fraud in 2003, and following 100's of credit bureau disputes, legal action, and an actual lock on my credit report, I would advise employers to tread very carefully on how a credit check adversely impacts a candidate. If a candidate fails to land a position as a result of a wholly inaccurate or even "victimized" credit report, that candidate then has a serious claim to the unfairness and inequity such a policy has placed on them. Such a policy adds another pain to one of the fastest growing crimes in this country.
Posted by Chase Wilson on September 25, 2006 9:48 AM
In light of those corporate scandals, such as Enron and WorldCom, we need to start educating business people to start thinking long term. I know that this is hard because it is human nature to think short-term.
When you are thinking about investing your money in the stock market, most stock brokers will advise you to "ride the highs and the lows" of the stock market. In other words, to be in it for the "long term." Why can't we teach that to the business executives?
This short-term mindset causes this greedy behavior on the part of executives. The people that want to invest want to see results NOW. Why can't that same advise from that stock broker apply here?
Posted by Nick Roy on October 2, 2006 10:17 AM
I have to agree with you Nick on all sides of your postings. Credit Checks are not something that should be used to analyze a potential employee, its seems to me that this is a very fine line along discrimination. I will use my own personal case for example here. We moved to Va and my husband was told he needed a new liver in order to survive. Well while we were waiting on social security to render their verdict, we still had medical bills along with all the other bills, the medical though was even tougher because of no insurance. Needless to say that has all effected my credit, and furthermore anytime, someone runs a credit check on you, it causes your score to fall even more ( a hard lesson learned here). So all the 10+ jobs I have applied for had just caused my credit rating to be worse than it was before the 1st started digging in it. I am a manager, I had to take all the tests to get there, but yet employers still insist on running a credit report. This is outrageous. I am now being considered a irresponsible person because my husband is dying, I need a better paying job and I am in debt? The person who came up with this idea of checking a persons credit to see if they qualify for a job, really had to much time on their hands, and I would love to see what their report looks like. Further more, try telling the unemployment office that you have tried to get a job but because potential employers keep checking your credit that its just impossible, I am almost postive that one will go over like a lead ballon.This checking a persons credit should be abolished, for crying out loud, life happens and it happens to all of us, just another thing in life that does not discrminate,why should employers?
Posted by Dana Hoffman on October 2, 2006 10:37 PM
Excellent point Dana! Since you are a manager, I am assuming that you have been given authority to hire people. If so, are you using your life experience and evaluating candidates based on their work record?
When you apply for a job, most employers will have you sign a piece of paper releasing the credit check. I like to urge people who read this blog and are looking for a job, to refuse to sign that little form releasing the employer to perform a credit check. Then let me know what happens.
Also, I would like to urge anyone who feels that they did not get a job because of that credit check to get an attorney and push for legal action against employer. Now some of you may not be able to afford an attorney, however, I'm sure if you look around that you can find one who is willing to do pro bono work and challenge this.
Posted by Nick Roy on October 10, 2006 8:47 PM
Why there outta be a law...
First off, is there really any connection between poor credit and theft ?
Second, its all about class. Call it what you want; classism, class warfare, hatin on the poor- it's all the same.
Third, we should never forget that it's very, very important that people pay their bills. Social rules that help enforce that are not all bad or undesirable.
Fourth, our political system is undergoing intense change via the Internet. Better laws and better information are going to be available.
For example, employers may be allowed to use a credit score, but if the score is below the 20th percentile, the reporting agency must provide a digest of the report to the employer, who must certify that it was reveiwed for patterns of identity theft, medical issues, or other mitigating circumstances.
If the report is that important to employers, they can do a little extra paperwork to use it.
I would like to know if I'm thinking about hiring a person who is into Ballys, Ceasars, Mandalay and Wynn for a few hundred g's - maybe a guy like William Bennett ?
Have fun with those new politics !
Posted by martin snyder on October 12, 2006 1:25 AM
I have a few additions to this topic. First, my husband and I chose to live on one income for sake of our children. We both couldn't see paying someone else to raise our children. Neither of us have or use credit cards because we were both raised believing that was "theft", using other peoples money or spending money you don't have. You just don't do it. We owe no one anything but in that also comes stumbles that show up to bite you.
My husband got laid off 6 months ago, leaving a family of 5 with only unemployment to live on. I started looking for employment with absolutely no luck. I was turned down multiple times due to credit.
I have since REFUSED to give potential employers that freedom for a few reasons.
1. If you are going to measure my employment worthiness based on credit, I don't want to work for your company.
2. having neg. credit does NOT make me a criminal. On the contrary, my refusal to use money I don't have makes me more honest than most.
3. Feel free to do a criminal check instead.
4. What happens to that information once you DENY me for employment. I refuse to be dealing with id theft based on careless handling of documents.
Here's a scenerio to think about....
A doctor just out of college stumbles on his credit cards. Does that make him any less of a doctor?
Answer is NO. Negative credit is a way to keep the poor poor and the rich rich. I could understand it for certain circumstances such as a loan officer, bank employee but for someone to be employeed to answer the da*n phone.... Not necessary.
I'm sure the welfare to work program didn't see this one comming. And they say, get off your ass and get a job? ... HOW when the world won't let you.
Posted by Tammy Becker on January 3, 2007 3:48 PM
Ihave recently applied for temp work. For the first time in 27 years my credit is screwed up due to medical bills.
I think it is an invasion of privacy, especially since I will not be handling any finances or money.
For an employer to know all my credit history, personal details in my opinion is not something that would affect my job performance or integrity.
Janet
Posted by Janet Lloyd on March 2, 2007 9:09 AM
Most people have bad credit
because of not being able to
have a good paying job, or for
health reasons, I'm sure. But
how do our comments on here help?
Is there something to be done
when your name is left on a phone message, and you're not
even called back, no resumae
or application signed, etc.
Can there be a law passed??
or, is there an employment
agency to use that would help?
Posted by Donna Walker on April 2, 2007 1:24 AM
I find it completely unfair to not hire a person simply because their credit isn't perfect. Many people go through financial hardships that cause them to go from having good credit to adverse credit. To simply look at one's credit report and determine they're not good enough to work for the company despite a stable work history, being a college graduate (with honors) and proven ability to do the work and keep things confidential is unfair. I'm pretty sure the guys who brought down Enron and Arthur Andersen had great credit. Go Figure!
Posted by Smiley on June 20, 2007 12:13 PM
I didn't see an answer to the question? What can one do to get a good paying job if they have adverse credit? I got laid off my job in 2002 and have been able to obtain employment, not in my field and also for $50K less than I made in 2002. I also am not working in my field of expertise. I need help, I have aced the interviews and call backs but no job offer due to my credit. Before the layoff up to a year later my credit was very good. No one looks at that. I need help, because of the small pay and being a single parent, I am unable to pay my old creditors which mainly utility bills.
Posted by Brenda on July 14, 2007 10:47 PM
this is screwed up my wife and i fell on hard times i got layed off took out a home equity to try to stay a float and when that all failed iand i still could not find a job after 10 months i filed bankruptcy. My wife aplied for a job at a bank now mind you my wife has worked in the banking industry for nine years and has been flawless in her work was declined a job because of our bad credit this is discrimination at its best. I could see if she was just all of a sudden trying to become a banker but 9 years in the industry and this is what we get. I wish i could find a lawyer with some ba%%s i think we could win a lawsuit if it was handled right. we even recieved a letter stating that was the reason for not getting the job. Bullshi$
Posted by jay on August 10, 2007 12:35 AM
I feel you I have the doulble whammy I am a senior citizen and have bad credit, my credit was good enough that I have a 2006 and have managed to keep up the payments on it I have been laid off twice in the last year I ace the interviews but I don't get call backs, what the heck is an older person supposed to do, i have always worked and I'm not the type to sit at home and you can only do so much volunteering
Posted by Agnes on August 24, 2007 10:07 PM
Having a 'black and white' policy of not hiring candidates with credit problems should be against the law! For some candidates, it actually is against the law. I successfully sued a company who had made me an offer, only to rescind the offer two days prior to my starting date based on my credit history.
Here's my story in a nutshell-
I'm a college-educated white male, 32 years old and my degree is in Accounting. When I was 25, I was diagnosed with leukemia. My employer at that time was very supportive, but while being treated I missed significant periods of work without pay. With the medical bills and related expenses, I had to file bankruptcy within a year.
At the age of 28, I suffered a relapse and I could only afford to put a roof over my head and pay for my car. The credit card companies were the least of my concern at that point.
About two years ago, I finally got to the point where I had paid off all medical bills and earning a healthy salary. I began paying off all those two year old debts so they would show paid on my credit report even though the negative payment history/default was still there. I hoped that would demonstrate ethical behavior and my attempt to fulfill my obligations rather than just ignoring them forever.
I applied for a job with a commercial development company last year for a Senior Accountant position. I exceeded all the requirements they were seeking. They made me an offer, we negotiated for a few days and I finally accepted. My start date was just over three weeks from the date I accepted their offer. Two days before I was to start (but after I had finished my two-week notice at my previous employer) they called to tell me my background check didn't meet their standards and the offer was null and void!
I tried to explain the cirucumstances, but was met with hostility and condescention. That's when I called an employment attorney. I filed suit under the reasoning that my medical condition was the only reason for my credit issues and provided documentation to support that claim. Essentially, they were yanking their offer because of my previous health issues and related disabilities.
I ended up getting one month's salary, my legal fees and the company changed their hiring policies. I could have gotten more money, but I really just wanted to make my point!
Posted by Jason on September 10, 2007 4:03 AM
Is it unlawful for an employer to to check my credit?
Posted by Ronda Goodlin on March 17, 2008 10:46 PM
I am somewhat relieved to read these postings. I, like Jay's wife, have been in banking for 9 yrs. I recently had an interview with a michigan based bank. I interviewed for over 2 hours! Things seemed to go really well. All that needed to be done was my background check. Hmm...credit problem. I've never had a prospective employer bring this up before. I HAVE worked directly with money and have never taken any of it!! I would never jeopardize my job. I am an ethical person who works hard for what she has. My credit bares no relevance in regards to my ability to do my job. I'm thinking my credit would be cleaned up by now if I had stolen from a bank before. How am I ever supposed to be hired in a field I've worked in since age 19 when they won't hire me because of medical bills and late payments? Not fair!! I have no criminal background and a very solid employment history. : (
Posted by Christine on April 15, 2008 4:40 PM
I am having the same problem as a lot of the people posting on this site. I have worked in the accounting field for over 7 years for an international company. I was in charge of reimbursing employees expenses and paying invoices sometimes for very large amounts. I handled ACH and wire transactions which required me knowing the person/company's bank routing number and account number. I also handled petty cash and the journal voucher entry for miscellaneous petty cash. I resigned from my job in November of 2007 voluntarily because of burnout to pursue other interests and a different career field. I have poor credit due to filing bankruptcy because of large medical bills that I incurred before I had insurance. I have interviewed for various positions and been received warmly on these interviews. All these jobs I have been very well qualified for, but as soon as they do a credit check - that's the end of the job. I don't get the job and receive a generic letter in the mail (if I'm lucky) telling me that I was not chosen for the position. None of these jobs even involve handling money, bank account information, etc. I feel this is discrimination at it's worst. How in the world am I supposed to make a living if I can't get a job due to my credit? If I had wanted to steal money (and keep a perfect credit score); I had ample opportunity to do that on my last job. I have morals and do not believe in stealing. I have always believed and taught my children that nothing is worth stealing. I am 58 years old, so I'm sure my age is also playing into the picture. I am not ready for the retirement home, and due to a divorce 11 years ago I am far away from retirement. I just want to work and be treated fairly. I'm not used to asking for handouts and am not about to start now. I just want to work and pay my way as I always have.
Posted by Jean on May 18, 2008 10:09 AM