Posted on 05/14/2013 10:08:09 AM PDT by Badabing Badablonde
Nearly half — 47 percent — of employers use credit checks when making a hiring decision, according to a 2012 survey by the Society for Human Resource Management. Most businesses use credit checks only to screen for certain positions, but one in eight, the survey found, does a credit check before every hire. “We’ve heard from dozens of people over the past several years who say they’re being denied jobs specifically because of a credit check,” Ms. Ludwig said. The people contacting her group, she said, are “mostly lower-wage workers,” especially those applying to big retail chains.
“Prohibiting the use of credit checks in employment is now our number one campaign,” Ms. Ludwig said. “Because it’s discriminatory. And because the last thing we need in a recession is another barrier to employment.”
Lawmakers in some jurisdictions have proved sympathetic to those arguments. Nine states have adopted legislation that curbs the use of credit reports to judge prospective hires — seven of them since the start of 2010. Representative Steve Cohen, Democrat from Tennessee, has sponsored federal legislation that would restrict their use. The New York Legislature and the New York City Council are considering strict new laws that would greatly limit an employer’s ability to do credit screening.
(Excerpt) Read more at finance.yahoo.com ...
Well now that former employers cannot give out any information other than the date the employee worked there, companies have to find other ways to access potential candidates.
Once they can establish a link between credit reports and RAAAAACISM these things will become 100% radioactive.
Credit checks should only be used for money handling positions. Especially during this economy where people are struggling.
Only if we can apply it to elected and government officials.
You would be surprised how many things are tied to your credit score. It is a bogus way of weeding people out because it does not take into account the underlying reason for the score, like identity theft, an ex that runs up cards in your name before leaving you, massive medical expenses resultant from an accident with an uninsured person, etc...
Credit reports supply data and usually a score to help quickly assess risk. But they do not tell the whole story (a long career interrupted by a lay-off, being over-run by medical expenses, a nasty divorce, etc.). I hope employers dig deeper when they see a bad credit report vs. simply turning the applicant away. Someone with good or bad credit doesn’t always continue to have good or bad credit.
The Left banned pre-employment polygraph tests with one cleverly staged piece on 60 Minutes. They can get this banned too.
My employer does not conduct credit checks on new hires, however they are very conscientious about diversity. After new managers are hired we often get garnishment levies for them. Some of them get corporate credit cards which they abuse. They put personal expenses on the corporate credit cards because they are irresponsible f*&$ups and don’t have their own credit cards. All this crap in the name of “diversity.” Of course, these diversity knuckleheads all get paid more than I do. Grrrrr.
“Despite his sympathy for his clients, Mr. Burman told me that he never makes a full-time hire at Credit Advocates without first pulling that person’s credit report. An employee dealing with bill collectors could be a distracted worker, he said.”
Apparently this is the only sort of thing that can “distract” a worker. Does he summarily eliminate people with children, people who have recently started dating, or people who happen to mention that they could use the money to get that timing belt replaced?
You need to track credit history vs work history. Obviously if somebody is unemployed a long time their credit will be crap, but if their credit is bad during a time when their resume says they were employed and well compensated that’s a person you might not want to hire. Not sure all companies are smart enough to use it well, but that gets back to the old question of if you really want to work for a company that would use it poorly. They’re probably just doing you a favor by not involving you in their BS.
Repeat after me; Diversity is our downfall, say it again...
Though this wasn't applying for a job, I had applied for a credit card through my bank a few years ago. I was surprised when I was turned down since I had very large sum on deposit in the bank at the time. So I went down to the bank to see what the story was. They said I was turned down because I had over 50 grand in unpaid debts. Of course I went ballistic. They rechecked it. It turned out that the person at the credit bureau didn't clear the screen of the previous person they had checked and included their info in mine. If companies are going to use this, they should be required to tell you the results so you can challenge it if incorrect.
On the other hand, you should get your own credit reports before applying so that you can alert the company about any potential things they could find.
At the very least, it shows that you took some initiative.
Isn't just about everything in the hiring process discriminatory? The employer is trying to discriminate between the skilled vs. the unskilled, the hard working vs. the lazy, the pleasant to deal with vs. evil jerks, those who will work cheaply vs. those who demand more than they're worth, etc. etc. etc. If you don't use some method of discrimination, then you might as well put all the resumes in a pile and pick one at random without interviewing anyone.
If credit scores are an effective way of telling the difference between good potential employees and bad ones, then the companies who do them will prosper while those who don't won't. On the other hand if there is no correlation between the credit score and employee quality then those who throw out otherwise good employees because of their credit scores will fail. I expect the best point is somewhere in between where a poor credit score could be used to ask further questions about why the score is poor.
The best way of handling it is let the free market sort it out rather than using government commands.
Interestingly, you can have a non-existent credit score, or a poorer than otherwise reasonable one, from not borrowing money and living on a cash basis. That would be a great employee to have, but a pure credit score would reduce his chances of being hired.
There were many very talented silicon valley personnel who had their credit trashed in the 2008 crash and subsequent layoffs. Many of them lost everything. I would hope that a potential employer would be smart enough to realize that.
That would be in that “period of unemployment” phase like I mention. A credit history really would need to be viewed side by side with the resume.
Were I a potential employer I’d want know that a prospective hire pays his bills.
Exactly .... unfortunately it is not always done
I would have less of a problem with credit reports this way if the credit reporting companies were 100% liable for damages due to inaccurate data and anyone reporting derogatory info had better have verifiable proof to back it up.
Interviews have not been shown to be highly predictive of employee success. I’m not sure of the predictive value of credit reports unless there is an obvious problem.
In Europe, the interview process is exhaustive because it is very difficult to get rid of bad employees. They use handwriting analysis, psychological tests and multiple interviews.
If employers cannot use effective tools to screen employees, employers will be much more tentative in hiring and they will restrict new employee hours and increase the probationary period. You can also look for more employee surveillance of new hires (cameras, computer monitoring, security).
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