Pongo Resume

Finding a job is tough enough today. Unfortunately, some employers make it even tougher by asking to look at your credit history. As if that should make a difference when you’re applying for a job in, say, teaching or nursing, or if you want to oversee computer networks or – umm – even write for a web site.

Certainly, checking your credit is justifiable if the job is in accounting or finance, or in the financial services industry. Companies, after all, don’t want people with financial problems watching over their assets. But is it really necessary to base a hiring decision on how much credit card debt the job applicants have, or whether they were late with a mortgage payment, or fell behind on medical payments because they had no health insurance - since they have no jobs?

Lawmakers in at least 16 states find this practice as insidious and privacy-invasive as I find it, and they’ve filed bills to curb most credit checks by employers. I mean, how can someone improve their credit rating if no one will hire them because of some temporary financial blemish on their credit history?

Some employers will argue that running a credit check gives them an idea of the candidate’s honesty and sense of responsibility. Really?!? They could find out that and even more by calling references and doing a web search. Or is that just too hard and time-consuming?

Fellow career blogger Eve Tahmincioglu addressed this topic last week on her blog, CareerDiva.net. She argues that an employer could even take credit screening a bit further by using it as a cover to discriminate against minority hires.

Under federal law, an employer must get an applicant to agree in writing to have their credit history checked—if an outside screener does the fact-checking. But no permission is required if the employer does the checking itself.

But anyone who refuses may be sinking their chances. And in today’s economy, unfortunately, many unemployed people will do anything just to start drawing a paycheck again.

Have you ever agreed to a credit check by an employer or potential employer? Did you feel it was necessary or did you believe you had to agree to it? Tell us about your experience.

RELATED LINKS

Good Job Seeker, Bad Credit: Are You Screwed?
Job Searching with an Imperfect Past or Criminal Record
Jobless? Don’t Let Desperation Expose You to ID Theft

 

I think it is terrible that candidates are being subjected to a double whammy and a catch-22 during these turbulent times. Your credit is affected by the loss of a job which results in the inability to pay bills. You can't find a new job because you were unable to pay your bills while unemployed. How is a person supposed to get back on track with these types of barriers in place? Kudos to the 16 states who are against using the credit score as a barometer of how effective a person will be as an employee!

Do you know, by any chance, which 16 states are attempting to legislate against this?

I can identify with this article from two angles; as a former financial services professional and as someone in the job market. Employers like using this as a screening tool, it is one more way of substituting a score for judgment or discretion (possibly shading them from some legal exposure). Credit scores, (most people can not read a credit report, they rely on one of three credit scores), have inherent flaws in them. If you don't believe me, look at the catastrophic financial crisis we began in 2007.

Credit scoring (and its flaws) are key to the mortgage collapses that rocked the world. It is insane that employers would seek to use them as determinants in hiring people! Having worked with credit evaluations and scoring for nearly 2 decades, I can tell you that hundreds of thousands - maybe millions- of sharp, concientious, reliable, honest people have poor credit scores. Ask Dave Ramsey.

This situation exists because credit scores are flawed in how they grade a person's credit history. Unscrupulous people (the people you would think scores are intended to screen out) can manipulate the system to obtain higher scores. People with poor judgment but making regular payments can have high scores. People on their way to economic collapse can have high scores (again look at our recent financial catastrophe).

Conservative honest people can easily wind up with poor scores, simply by widely avoiding the use of credit.

We are overdue for a real leader to bring about legislation to end the use of these scores in employment decisions. As the article pointed out, they have no place in the process. They are not a substitute for judgment or competent interviewing and decision making.

Look at business before credit scoring and business after using scores. Have we seen a marked increase in honesty and ethical business practices, a decrease in embezzelment? I think things were better before these were widely used. They certainly have no place in a market where hardworking, unemployed people and businesses are struggling.

I will sign a petition to ban credit scores in hiring now. I will support any legislation proposing such an improvement. I think it warrants more attention from our national leadership than so much of what is occupying their time and (our money)!

@ Vivian -- Here are three states I know are considering legislation: Wisconsin, Maryland and Oregon. There may be other moves afoot in Connecticut, New York, and Missouri.

@ Fred -- I hear you! If we're trying to make a substantial cut in the unemployment rate and right the economy, government can make it easier to for the jobless to get back to work.

I agree that credit scores are not a fair indicator of how you will perform on the job. Here in Illinois there is a push to stop this practice, It not only can keep you from obtaining work, but every time your credit is run it lowers your score it is just a vicious circle to keep the little guy down.

Kevin---you are correct. The gap between the financial have and have nots has never been wider, and the very people with the most money are the very ones making sure it stays that way. And yes credit reports are almost impossible for the average person to understand. There are services out there to help you correct your reports but unfortunatly the cost is out of reach of the very people that need the help.

Bob

@ Kevin and Bob -- Yes, that's one point I forgot to mention in the post about the lowering of your credit score every time someone does a check. Imagine someone who's unemployed and undergoing credit checks for, say, 10 positions while under financial stress. Talk about adding insult to injury.

Well said! Got down to the end of a job offer, only to have to sign a release for a credit check....killed that possibility. Lost a job in 08 due to company closure, then again in 09 due to company downsizing. Lifetime of almost perfect credit destroyed in a matter of months. Can't access any line of credit due to unemployment. About the only way to add cash to an unemployed, cash depleted job seeker is to cash in retirement funds (at a steep cost). What sub-category is, "soup kitchen" worker under? :o)

What a darn shame. If prior to job loss, one paid up the bills; had a great sense of financial responsibility and had great credit scores; then unemployment comes along with barely a UI check to cover rent, food and maybe utilities. You're shuffling from month to month; want to but don't have the additional money to pay the bills; so your excellent credit now sinks. So you finally find a job; and am now thanking God that now you'll finally be able to pay back the creditors. What are you saying now? The companies may use your past credit record to make/break a hiring decision. Talk about a double whammy!!

Credit checks are a definite invasion of my privacy! I believe it gives the employer too much information. I am very trustworthy and can give many references. I went thru a bad divorce 7 years ago and my ex paid his attorney a very large sum of money to push me into a BK. His motivation was to make sure i would not get a good job. He has been successful! Shame on him and both attorneys (where is their social responsibility and ethics) Be aware of missouri attorneys! I have had the worst employers in the past seven years and have resorted to temp work. Maybe someday some one out there will see the good in me and give me a chance!