It is a dilemma that many individuals are facing today with rising unemployment and the overall state of the economy. You don’t have a job, so your credit has suffered due to your inability to pay your bills. And you can’t get a job, because you have bad credit.
Seems like a dual-edged sword, doesn’t it? The number of companies checking credit scores of potential candidates as a condition for employment has increased significantly over the past decade. According to a survey by the Society of Human Resource Management, in 1998 only 25 percent of employers ran credit checks on job candidates. That number increased to 43 percent in mid-2000, and now in 2010 it is estimated that approximately 60 percent of businesses in the survey are pulling credit checks as part of an interview.
Employers justify the need for credit checks by insisting they provide valuable information about an applicant’s honesty and sense of responsibility. But the federal government as well as lawmakers in a number of states are considering new rules to stop employers from unfairly screening out job applicants due to poor credit reports. Consumer advocacy groups are strongly supportive of the legislation outlawing this practice, pointing out that credit reports frequently contain inaccurate information.
The state of Oregon is one of the states proposing a bill to eliminate this practice. SB 1045 is titled “Limits use of credit history for employment purposes to certain circumstances,” and it does just that: prevents employers from requesting credit checks to use as a screening tool for potential employees, unless the credit history provides a substantial relation to the employee’s job (for instance, a banking or mortgage broker position). Quite a few states have or are considering implementing similar legislation including Connecticut, Wisconsin, Hawaii, Missouri, New York, Washington, and Texas.
With so many people foreclosing on homes, losing cars and not paying off debt due to the state of the economy, many jobseekers have bad credit. Honest, trustworthy people are being shut out of jobs at a time when the economy is bad and unemployment is even worse. This new legislation proposes outlawing most credit checks, which consumer advocates say traps people in debt because their past financial problems prevent them from finding work.
Are credit checks on new job applicants OK for employers to require, or should the practice be banned? Tell us how you feel about this issue by leaving a comment!
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I think it is absolutely wrong to base a job offer on a person’s credit. A score by a credit bureau is not an accurate reflection of a person’s work ethic.
After working as a Senior Sales Manager for a major corporation for 14 years I decided to leave to relocate making sure that I had a good reference and was in a rehire status if I decided to come back. I KNOW as a hiring manager that the company I worked for would not hire people with a credit score below a certain number. In the mean time my wife broke her foot and was out of work and the medical bills piled up. When applying for jobs I know I am qualified for the response was:overqualified,etc. In the mean time we lost two houses. I decided to go back to what I was doing before and to my amazement-I was not eligible for rehire! My performance was in the top 10% of the company. My income was between $54,000 to $75,000 per year. I am now a bagger at a grocery store just to work and get by. This is TOTAL DISCRIMINATION! Signed: “Living the American Dream”
Did employers ever hear of- bad things happen to good people??I have a banking background and I lost my job in title company. I’ve been trying to get a job as a teller and had interviews, but I believe I am being turned down because of my credit check. I just think employers should concetrate on crimal backgrounds instead of credit backgrounds. Unfortunely, I get to live the american nightmare.
I am a single mother of three. I was up for a promotion at my work, They had me sign for a “back ground”check and now I have been turned down due to my Credit!!! When I got my divorce my ex husband took on some major bills so he could get a few things he wanted. He has those things, and has never paid a single bill. I am always being taken to court because of this. He isn’t paying child support, which IS court ordered. He isn’t hurting but my children and I are. How does this great land of ours think this is fair? ~puzzled
This is a very common occurence in todays enviroment of defaults, debt and creditor refusal to follow state and federal laws. Individuals very often find that errors from the credit reporting agency’s are there for an extended period. Do your research and fight these errors. It may seem daunting but if you do not take time, (and it does take effort), you will at some point be hindered by stupid, unfair and egotistical errors by reports to credit agency’s by many companys. They know you do not have the time, money or knowledge to take them to task. Good luck and fight on.
I don’t understand what does your credit score have to with your job experience. How is a person suppose to pay their bills if the companies don’t hire you because of a bad credit score. This is totally unfair and ridiculous. Especially now with this bad economy. Congress need to change the laws and soon.
You guys don’t get it…
The government wants you and the lower class to be unemployed and on welfare. That way the economy continues to implode while the bankers and international corporations are making our laws and profiting from our demise.
All part of the system by design. None of this is by accident.
Rob
Especially with today’s economy as it is, it is becoming unrealistic that employers should discriminate against potential employees based on their credit score. Just because they have a low credit score or applied for bankruptcy doesn’t mean they are a criminal!!! I think credit checks on potential employees should be banned altogether because it is based on incorrect and faulty assumptions.
it seems to be vicious cycle? you’re/we’re in debt and can’t get a job, based on credit, to secure a job, to pay off debt! doesn’t make sense, and of course seems grossly unfair, based on many other criteria for minority job seekers to secure a job!
I’ve had good credit most of my life with no credit issues (until I lost my business because of the Housing crisis) and was suprised to find out that my credit report is now such a “Death Nail” in trying to get a decent job!
I used to make Very good money owning my own business before the economic crisis and now work at a “Call Center” because I keep getting turned down for better paying jobs (even in direct Sales positions) because of my credit report; which in no way reflects my abilities as a sales person.
I have to say as a government employee that deals with money AND as a landlord, I agree with the policy. A credit score is not a record of job performance, but a guage of the ability to be trusted to keep your promises. You can actually thank employment laws for this one. As it is so difficult to fire employees without lawsuits, the only protection employers have is to keep potentially bad employees out. The competition is fierce from other applicants WITH good credit. Bad credit means a person did not keep their promises, so why would a good employer want them?
Bad credit means a person did not keep their promises, so why would a good employer want them?” All individuals with bad credit are not simply promise breakers, they are subjected to a harder road than many of us will have to travel in our lifetime. Many of these individuals have sick or disabled loved ones and they apply for jobs that will bring in more money to the household. However, due to the myopic arrogance of employers and the detached nature of those who are in the “good credit club”, many people are subjected to blatant socio-economic discrimination due to credit checks. Good credit is not an obvious sign of intelligence or trustworthiness. Good credit simply means bills were paid on time. Could a person with good credit, be making sure expenditures are accounted for? Sure. Could it be because affluent parents foot the bill each time? You bet. However to slander those with bad credit as liars, cheats or untrustworthy is sort of a stretch.
Now they are targeting you if you are Christian and/or anti gay, you cant be considered for adoption. Whats to stop them from hiring you for the same reason?
Your looking for work, that does not give them the right to stick their nose in your personal life! Your bills, kids, home, have nothing to do with the job hiring process! Any company that does this, villify them! I would not want to work for such a company!
I was turned down after a 2 month interview process and was basically hiring, then they mentioned it is contingent on a credit check. I have a foreclosure, and was denied.
GUESS what? The irony is, that this was from a bank. The ones that caused the effing crash to begin with.
BG from January 27th, 2011…You’re a GD Idiot! I have two small children and a spouse to care for and I lost my ass to fraud and now I can’t get a descent job or any job because of this BS credit stuff. You just put yourself in my shoes for a damn minute! My 4 year old and 7 year need food for God sake and you’re busy defending utter discrimination! You’re a short sited fool! People are going hungry and you could give a damn because some company somewhere determines they can’t trust someone they don’t even know! How the hell is someone supposed to have good credit and pay their bills if they can’t make any money to do so? That’s an endless cycle that will lead to people taking up arms. 44 million people are on food stamps and I’m supposed to have sympathy for a company with some white collar fat ass sitting on the top floor? Please! One day it will be absolutely illegal to discriminate based on a number attached to your name!
This is bad as debtor’s prison in England at one time. I thought it was outlawed in the Constitution? It is a Catch-22 situation, you owe debt and cannot pay because you don’t have a job and you can’t get one because you are in debt? What idiot ever came up with this idea in the first place? Most people look for a job so they can pay their bills and upkeep.
I Was A Peace Officer and lost my job due to layoffs. I filed a bk while I was an Officer with the rank of sgt. I am Still the same Officer honest and dependable With excellent training and awards. But won’t even be looked at because of my bankruptcy.
It’s very sickening how well-respected organizations could bend the rules just to allow what they believe to be “right people” under their employ and leave others to suffer in financial ruin. Who are they to assume they know you through statistical data? Who are they to even think they understand where you are coming from after reading your “personal records” let alone your credit history? We ARE people! We aren’t toys laying on a conveyor belt at an assembly line! They preach in fine print about how they do not discriminate against applicants and yet they just did. Why? And the economy’s no excuse for such prejudice. There are those of us out there who are willing to change and have better lives while there are others who are in need of supporting their families, so why deny us our right to contribute to society while earning what we strive for in return?
I will start by saying my comment is very biased although an inconvenient truth.
I personally love any system based on credit scores because I have impeccable credit since i was 18 and these systems reward me for living below my means, paying my bills on time, and just being generally responsible. I hold a DoD security clearance and I love the fact that they check my credit. I get lower insurance rates, and presumably more/better job offers.
Good credit does not necessarily mean I do my job better. Good credit means I am responsible, trustworthy, keep my promises, have made good financial decisions, and am generally more responsible. I know other people with good credit that show these qualities and I know people with bad credit lacking these qualities. Why, as an employer, do I want to hire somebody that has demonstrated to be irresponsible in a different area of their life? You are forgetting, companies DO NOT exist to serve employees. Companies exist to make money and hire people as necessarily – hoping to hire the more qualified. If given a choice (all else being equal) would you hire a person demonstrated to be responsible with their personal life or irresponsible?
How did I get good credit? I started working when I was 15 and always lived below my means saving money along the way. I got a credit card at 18 and used it only for things I needed anyway – I did not get credit drunk. I paid my bill in full each month with my own money (not parents). I made more money than I spent so each month my savings grew and paying my bills on time was no problem. I eventually got more credit cards to take advantage of different rewards programs. I always pay all my bills on time – it is easy because I have savings and make more than I spend every month.
When I was 16 I rode my bicycle everywhere even though I had enough money for a car. I didn’t want to be “broke” and didn’t buy a car until I had enough money to replace it. Now I make $100,000/yr and drive a 10 year old econobox with 160,000 miles. I use an antenna to get my TV for free. While in college I worked 30 hours/week to pay for it without debt. After college I worked full time in my field AND had a part time job on the weekends for several years to build up a respectable emergency fund that could pay for my living expenses for 3 years should I lose my job I have never bit off more than I can chew. I have always had a significant emergency fund. I always look ahead. In a nutshell, I treat my personal finances very responsibly.
On the other hand, some people let their spending expand to fill the available money supply (blow their paycheck or max out the credit cards). Some people decide how much to spend on a car/house based on how much the bank will give them. These people have credit problems at the 1st blip of an issue. You should never need somebody else (the bank, credit card, etc) to cut you off and control your spending. You should do it yourself.
All else being equal – if you owned the company who would you rather put in charge? Who would you rather trust with YOUR money? Who do you think is going to be more reliable? Companies like to discriminate against bad workers and thus predictive factors (credit score) come into play.
I know who I would hire. Saying companies shouldn’t care about your credit history is like saying, “I stiffed Paul. Peter should trust me because I didn’t stiff him and it is totally unfair of Peter to ask Paul what he thinks of me”.
A Taiwanese friend of mine summed it up when he called the US the “land of plenty” referring to how Americans waste their money and can’t save a dime.
I am sure that Bernie Madoff had impeccable credit too.