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 ...
Better yet ... make the credit bureaus FINACIALLY responsible for errors in their reports. I have two errors on mine that I have been trying to get off for years. I even hired my good friends service and the bureaus are still dragging their feet. My friend explained that the bureaus get money for each negative item in a persons report. That is why they are loathe to remove stuff
Yes, but anyone that wants to give you grief only has to show the "disparate impact" on "people of color" to "prove" you're a "racist".
further, if you're out of work and send your resume to 10 companies, 5 contact you about possible opportunities and all 5 run credit checks, your score goes DOWN because of the inquiries..it's why I get a copy of my report every 3 months and if I apply somewhere, I refuse to let THEM run the check, instead I hand them a copy of the report (it keeps the inquiries to an absolute minimum, which is ZERO)...if they insist on doing one themselves, I tell them not to bother and will go elsewhere..if I can't find anyone to look at my printed report and make a decision, I don't buy..
Try getting, or keeping, a security clearance with bad credit.
I told my current boss about my bad credit history before he hired me. His reply? "We like people with bad credit. They end up having to work a lot more."
I think it is reasonable to get a credit check on anyone that is supposed to pay you for something, over time.
I have a real problem with the concept of credit checks to get employment. As a contractor, I've been subjected to three in two years. It disgusts me. And the excuse is that they fear a person with "bad" credit is a security risk - except I hold the keys to no more secure data than pretty much anybody else here. It is really just a ruse.
But with the ramping up real estate crash, there are going to be so many highly qualified potential employees with "bad" credit that the companies will have to ignore the credit check except for the most dire cases.
>>These people have obviously never had a long term health problem or a long term layoff.<<
Or a divorce.
Absolutely untrue ... I just went thru it. I have 4 inquiries searching for a home loan. Not only did they appear, they dropped my score by 30 points
"I owe my soul to the company stow" I have experienced that people with extreme debt are very conscientious and miss very little work as a result. On the other hand, people that are very secure are more likely to take an extra day off for whatever. Not scientific but generally true in my biz.
To your point - I was laid off and out of work last year for about six months. If it wasn't for savings we would have been trashed. The irony is that our credit score actually increased during this period, yet we are now living on half the income and with zero savings.
However, to a certain extent, I agree that a credit report can yield a view to a person's sense of responsibility. In an extreme example, it is better to see indication of bankruptcy instead of numerous creditors suing and reposessions ocurring.
My perspective here is also from that of a former Credit Manager (NACM trained, 11 years of commercial, wholesale, and retail experience). My experience proved that credit evaluations are not an exact science and data obtained is occasionally incomplete or inaccurate in determining character, capacity, conditions, and capital.
see my #18..
I'm not complaining. My job requires me to have access to some very sensitive data and the people responsible for the safeguarding of that data must be very careful. Debt problems could indicate risky behavior that could pose a threat to that data.
My FICO is 720. I have never missed a house or car payment or had anything repo'd or foreclosed. I do have 15 negative items on my credit report resulting from a lengthy illness and dispute over a DX with my husband's doctor.
I will spare you the details but I really think it should be illegal to refer any medical debts to collections.
Persons with bad cradit are more likely to engage in illegal activities.
For insurance...persons with bad cradit are more likely to file fraudulent claims.
These are actuarial table proven but not PC.
Or be burdened with the administrative cost of paying out garnishees.
There is a value to the credit information, if used properly.
You're fully justified. Deadbeat tentants and those who break leases have bad credit.
But for homeowners and auto insurance policies? Show me the correlation between storm damage and credit rating, or collision damage and credit rating.
Employers are using credit checks as character checks, underwriters are using credit checks as a pretext to gouge low income people.
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