Monday, August 10, 2009

Bad Credit Can Prevent You From Getting a Job

What a catch-22: Another Hurdle for the Jobless: Credit Inquiries

Digging out of debt keeps getting harder for the unemployed as more companies use detailed credit checks to screen job prospects.

Out of work since December, Juan Ochoa was delighted when a staffing firm recently responded to his posting on Hotjobs.com with an opening for a data entry clerk. Before he could do much more, though, the firm checked his credit history.

The interest vanished. There were too many collections claims against him, the firm said.
One one level, I can understand the reasoning behind credit checks for employment. If someone makes a mess of their finances, they might make a mess of their job too. But a credit report can't always tell the full story and it ends up reducing a job candidate to a stereotype. A company might just as easily screen out former football players because they might be "dumb jocks," or people who like knitting because they might be more likely to get carpal tunnel syndrome.

How is someone supposed to get out of debt if companies won't hire them because they have debt? But it's certainly another strong incentive to stay out of debt in the first place...

13 comments:

mapgirl said...

In DC, a poor credit rating also makes you a security risk, so it will preclude you from jobs in security and law enforcement.

But the other reason they do this kind of check is to see if you have a judgment against you that garnishes your wages, etc. An employee with a lien on them may be in protracted legal battles that distract them from working.

I don't have a problem with this, but then again, I've had checks done on my at least 3 times and nothing happened to me. (At least once, my score was 650-700 and I still cleared the hurdles.)

Mrs. Smith said...

I'm going to go out on a limb & call this discrimination. What's next, genetic testing?

Credit scores are not black & white. What about the person who has a poor credit rating because they have family medical bills to pay? That's not a result of being irresponsible. Nor is having a poor credit rating because you pay with cash only.

Anonymous said...

Credit scores are not black & white. What about the person who has a poor credit rating because they have family medical bills to pay? That's not a result of being irresponsible. Nor is having a poor credit rating because you pay with cash only.

This is a poor line of reasoning. Nothing is black and white. Should an employer not be allowed to use college GPA? Perhaps the student failed a class due to a bad breakup. Should the employer not be allowed to use references? Perhaps your old boss hated you because he could see you were actually more talented. Should the employer not be allowed to use your job history? Perhaps you only got the impressive-sounding job due to nepotism. Etc.

Anonymous said...

I agree with Mrs. Smith checking a credit report (especially something as fickle as a credit score) is definitely discriminatory. There are many circumstances that could lead to a bad credit score that have nothing to do with employee performance. What if a woman had her credit score ruined by her husband--so she made a bad choice marrying him, but since when do we ask people if their spouses are idiots in an interview??? There are so many millions of reasons for a particular credit history--including irresponsible spending sure, but also including 999,999 other reasons that have nothing to do with irresponsibility or job performance!

Gord said...

I agree with that. A bad credit rating isn't always a result of poor character.

The use of a credit rating for HR purposes is simply poor practice.

It's a result of high rates of unemployment and the resulting competition for every job. Employers will look for any reason to exclude a candidate. I'm sure someone is going to use Tarot cards in their process.

savvy said...

I don't think it's a poor practice as a whole, but it depends on the job. If the position is something with access to large amounts of money, do you really want someone with poor credit and/or staggering debt? You don't want someone who might be tempted. There could be a lot of 'reasons' for the poor credit but that doesn't mean it should be ignored.

Anonymous said...

I've only known it to be done for accounting positions or other positions where the candidate had access to the corporate checkbook (such as payroll). If this individual was simply applying for a data entry position, was it with an accounting department?

Anonymous said...

"I'm going to go out on a limb & call this discrimination."

All hiring is discrimination. Perhaps you mean unfair discrimination?

Anonymous said...

Bronx Chica..wow they are starting to do this when it comes to trying to move...I'm looking at it good and bad...some ppl just have very poor spending habits and don't want to pay a darn thing back.

E. Roberts said...

is that so? I have known some lenders who specialize in approving bad credit loan and credit card request.

Anonymous said...

I think people who blog about money and using it wisely who write about spending/saving money on food should tackle this topic; If you see someone in any store that sells groceries buying something that you and/or your children and spouse don't eat but you buy the same thing, are you using your food money wisely?

Michelle said...

Excellent point. Just one more job requirement to add to the list: good credit.

Joey Gray said...

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