Posted on 02/05/2007 11:05:36 AM PST by MNJohnnie
Are Credit Checks Racist?
Studies haven't found a link between poor credit and job performance, but more employers are checking, and minorities are getting squeezed. Insurers are slammed for checking, too.
By Christian Science Monitor
Lisa Bailey worked for five months at Harvard University as a temp entering donations into a database. When the university made the job a salaried position, Bailey, who is black, saw a chance to lift herself out of dead-end jobs.
Bailey's superiors encouraged her to apply, she says, but turned her down after discovering her bad credit history.
Bailey, with her lawyer, has lodged a complaint against Harvard charging racial discrimination. The reason: Studies indicate that minorities are more likely to have bad credit, but credit problems have not been shown to negatively affect job performance.
Some privacy and minority advocates are now seeing credit as a civil-rights issue as minorities start to fight employers and insurers who base decisions on credit histories. Their effort could slow the near doubling in credit checks by employers in the past decade, which affects millions of Americans who are struggling with debt.
"It's definitely a civil-rights issue because of the growing use of credit reports and credit scores for hiring, renting an apartment, insurance and the fact that people of color have not been integrated into the credit-scoring system as much as traditional white middle-class America," says Evan Hendricks, the author of "Credit Scores & Credit Reports: How the System Really Works, What You Can Do."
(Excerpt) Read more at articles.moneycentral.msn.com ...
Within 90 days, you should be able to tell whether a guy can code or not. We hired a guy as a programmer once and put him on the oncall list. The first time he was called, we found out he couldn't code "I'm not really very technical". They moved him to Project Manager. All of that was within 60 days.
I worked with a guy who got cut in 89 days (90 day probation). He was worthless.
By the way, we do not perform credit checks on applicants.
>>With potential employees lying on their resumes and certain categories of questions not allowed by law, how does an employer screen out the "bad actors" from the applicants with really solid backgrounds?<<
Good question. How did they used to do it?
I like the concept of "innocent until proven guilty". IOW, I think a criminal record check is fine. It will tell them if you have actually done the crime. This is just way too proactive for 99% of the jobs out there. There are exceptions, just as some crimes call for the death penalty. But just as applying the death penalty to all crimes would drastically reduce crime - but be obviously draconian - I think this does the same regarding individual human beings lives.
And our country was founded on the concept of individual rights. Take that away and the country as we know it ceases to exist. But to be frank, I think we crossed that bridge years ago.
Not owning a credit card is also completely legal. If you don't like the terms, then take your business someplace else, or better yet, pay cash or use a debit card.
By the way, our company does not perform a credit check until after the applicant is hired. A drug test is required before hire however. You would be surprised at how many applicants know about the requirement to get a security clearance and yet still fail the drug test.
The problem is, I did like the terms. 7.99 percent interest. But then afterwards, they applied the "universal default" rate to the outstanding balance (which was not part of their original offer/terms). It's changing the terms of a contract after the other side has already acted in reliance on your previous bargain. This has brought many people to the brink of bankruptcy.
Is this a state issue? I've had to provide code samples/take a coding test on the last three programming jobs I've had.
>>Yes, I would love to return to a time when we could trust a person's word. <<
I agree with that, but this issue, IMO, goes much deeper than that. Could you trust a mans word in NY city, in 1960 any more than you can trust a mans word in Seattle now?
Your point does have validity though. As I read somewhere, "The less virtuous a people, the greater its need for laws."
BTW, I've heard that drug testing is on it's way out. Apparently it is not cost effective.
Might be. Since we are in almost every state, our hiring practices must be compliant with most, if not all, state practices. I'm not in HR so I don't have the answer.
Four years ago, I landed in the ER with a raging fever. The doctors almost gave up, but I made it through the night. I was told to forget about returning to work, the infection had damaged my left inner ear, and scarred my lungs. My medical insurance benefits were exhausted the first few days in the hospital. I had some savings, but by the time social security kicked in, after 7 months without income, my savings account was empty.
I have an almost perfect 50 year driving record. All of a sudden, my auto insurance premiums shot sky high. I finally got my agent to admit that the increase was due to my battered credit rating. I doubt I'll ever live long enough to pay off all those bills. I only drive 4 or 5 thousand miles a year, but the insurance premiums I would have to pay just simply make driving each mile a ridiculous expense. I bought a motorscooter, to hell with being robbed.
This is different, Harvard was not rent to her but to pay her. More sense would be be if she run credit check on Harvard :)
They should not hire people with low income.
several years ago, I was out of work for a while and accidentally let my car insurance lapse (I had it with allstate)..when I went in to renew, the agent told me that due to my credit score (out of work AND after a divorce), he was unable to sell me insurance..I asked him why not and he said people with a low credit score we prone to fraud (having their car stolen, burning it, whatever)..I reminded him I was an allstate customer for 24 years with only 3 claims (most expensive one was $500)..he said it didn't matter..
long story short, I got a job finally, moved to texas and went to see an allstate agent..she said georgia was ridiculous since I was a good customer for a LONG time so she sold me a new policy..when I moved back to georgia, my old agent (who had the policy transferred to him and was the one who couldn't/wouldn't renew my policy) immediately called and tried to sell me more coverage...I thought it was truly funny..
I've never cost them a cent.
Credit checks are standardly used for jobs that involve access to cash or financial information. The lady filing suit had a job dealing with financial info.
The reason is that people in financial distress are more likely to be tempted into embezzlement or theft
I've been a landlord in both Los Angeles and Seattle, and have yet to have a prospective tenent with decent credit. If I waited for a good credit report person I would never rent anything. Fortunately, I have somehow managed to identify the trustworthy ones and haven't been burned yet (knock on wood).
"The reason is that people in financial distress are more likely to be tempted into embezzlement or theft"
Which I addressed by saying that for some jobs, I understand it, most jobs I don't. Beyond that, I don't really buy that argument, though it is commonly accepted. I just think people will do what they do, irrespective of their circumstances. Honesty and dishonesty in a person will stay consistent whether they're broke or not, imo.
Mega Dittos!
Mega dittos!
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