Credit history has become a de rigeur part of the hiring process for most upper-end jobs (and even a lot of lower-end ones).

I don't think it's a "sad truth" that companies check credit reports. As a consumer, don't you want companies hiring honest, reputable employees? A person with a poor credit history is a lot more susceptible to temptation around money and/or sensitive data. All of the positions I've taken that involve dealing with gobs of personal, financial data have required it. It's the responsible thing to do.

My last three jobs (all in the mortgae industry - including a position in a file room) have required credit checks. So it's not just governmental jobs - a lot of entry level jobs are requiring this now.

The US government does this in cases where you have access to classified information, not directly related to the hiring, but related to the security clearance required for the job. The more interesting question is whether this can be done in cases where there is not a security clearance involved, just a job.

My job (I'm IT for HR company) did require me to sign a statement saying I allow them to check my credit report when they sent me the offer. My history is perfect so I had nothing to worry about.

There's a form you sign that authorizes them to do it. You can always refuse to sign the form, or if it's a form you have to sign anyway, cross out the language about the credit report.

On the advice of a lawyer friend I also write, "I expressly refuse to authorize my credit or medical history to be accessed or used, and I refuse to release anyone from liability for accessing, supplying, or using them." He told me NEVER to release anyone from liability for ANYTHING since it's only a way for them to cover themselves if they hurt you.

and so the cycle begins.....you cant get a good job because you messed up your credit, you cant pay your bills because you cant get a good job (or any job....retail, restaurants, etc), delinquencies go on your credit report and repeat.

Some (if not all) government jobs require it, as do bank jobs. I applied to work as a teller at a bank and they required me to submit to a credit report check.

It's supposedly a gauge of whether you can be more easily bribed or influenced. If you have bad credit, then the odds are higher you will accept bribes or steal.

The places that have done credit checks were involved in either the insurance or financial industry, even if the job role didn't directly involve access to money or financial information. I have not seen it happen in other industries.

@speedwell, avatar of snark:
just curious how does that work for you? I would love to be able to do that on my next job search.

@bohemian: restaurants and retail include a credit history consent form in their applications.

@cmdrsass:

Yes but it is unfair to many people. My wife was pretty much married right out of college, and all the credit cards and accounts were in her husband and her's name. Her husband ran up a lot of bad debt right before the divorce, and all of it showed up on her account. Not only that, but she had NO credit of her own. So needless to say, she had below a 600 credit score, yet had a college degree, was hard working, and very smart. But something that was kind of beyond her control was ruining her credit. She has had to work with a lawyer to get all of the delinquencies off.

My credit history was checked before I accepted my position in state government. I also had to fill out a ten-page background history report, presumably to make sure my answers matched what they were able to dig up. It makes sense as I have a lot of access to databases with people's personal info in them.

and now that the economy is in the toilet and people are ruining their credit with foreclosure and credit card debt compounded with job loss will potential employers still judge people based upon their credit history?

Once, when I was in-between "real" jobs, I took a part time job at Radio Shack, and they checked my credit as part of the interview process. IIRC, their reasoning was that b/c I would handle money, they needed to know if I had any incentive to steal. I didn't make bank deposits or anything, just shoveled money from the customer's hands into the cash register.

@cmdrsass: "A person with a poor credit history is a lot more susceptible to temptation around money and/or sensitive data."

Wow, you must be a great athlete. To be able to leap to the conclusion that someone with a poor credit history would be more susceptible to criminal behavior is quite astonishing.

I almost did not get a job (had to have a VP approval) because of a judgment on my credit report. I was offered the job and they rescinded the offer the next day after seeing the judgment on my credit report. Fortunately they listened to the story and pushed it through.

I fought a $2000 bill from a contractor who sued me for it. The judge said that I owed only $244 (because I could not prove every penny), but that went down as a judgment for $244 against me. In my opinion, I won, but it hurt my credit.

@huadpe: Yep, security clearances are big on anything a "bad person" could use to blackmail/leverage you into doing something for them. THAT'S the main reason they care if you have a shady past.

@cmdrsass:

It's not responsible to not hire someone simply based off a bad credit report, because let's face it--bad credit can happen to good people. (Layoff, extended illness).

It's one thing if a person simply doesn't want to pay their bills and is trying to manipulate the system--something else entirely if it's beyond their control.

"A person with a poor credit history is a lot more susceptible to temptation around money and/or sensitive data."

I'm guessing you meant that as a %, rather than the rather offensive blanket statement it came out as.

@bohemian:
Yeah, I've seen it all over the place. My credit sucks and I know it. If it ever stops me at getting a job then I'm going sue happy. A history that has nothing to do with a job at hand stops me from getting the job means I can sue.

I recently applied for an entry-level position with one of the big insurance companies and I had to agree to let them look into my credit history, credit score, and credit limit. All I'm going to be doing is data entry. I don't know why they need to know all that.

@huadpe: Its true. One of my coworkers was denied his security clearance becasue of his poor credit. He was lucky to keep his job.

Just because someone's credit might not be A-1 doesn't mean that they are dishonest. What if they had been careless and then were trying to get it together or just weren't very good at handling their money? Mine probably sucks, and there's NO WAY I would ever steal anything from the company I work for.

You don't shit where you eat!!!

@jjason82: I have a relative who works for the training department of a bank, nothing whatsoever to do with any banking transactions, and his credit is not only checked but monitored by the bank.

Back in the day I used to do background checks on apartment applications, and they pulled my credit reoprt to see if I had any collections or judgments against me that were related to my rental history. Also, judgments can usually = eviction. They didn't want anyone with that kind of background dealing with screening people. After I was hired, I saw one subsequent applicant be turned down for the position because she had a couple of judgments against her from previous landlords and still owed them money.

Can't speak as to whether or not that's right or wrong (although I can see the logic behind it), but it's an example of a job that pulls your credit as part of your application.

Actually, the Government uses this for more than security clearances. Many civilian positions, if not most, require a suitability determination. This is based on the same type of information that is collected for a security clearance. The primary reason the federal government does it that it's a good way to discover financial irregularities that would point to an issue. For instance, if someone who is going to make $35,000 per year has $150,000 in credit card debt, that rings a bell that the person could be susceptible to foreign influence. Likewise, a credit report could discover that a person has sudden un-explained wealth, which could be a sign of something nefarious as well. The Government is required to allow individuals to explain when this type of stuff comes up-but it's best if the employee discloses it on the background check forms.

The FCRA (Fair Credit Reporting Act) explicitly allows the use of a credit report for this purpose. The only requirement is that if the Credit Report is a cause of you being denied the job, the agency that supplied the report must provide a copy of the report to you free of charge.

I think that a credit report is a useful background check. If a potential employee is drowning in debt and can't make payments, not wanting them near money or valuable assets is a reasonable reaction. (at least not without a good explanation for the poor report)

SirWired

I do pre-employment background screening for a major bank. We do credit checks on many of our employees. The reason is that the company feels that if someone has large delinquencies they are more likely to skim off the top of their drawers, bags, etc, to cover their debt. We don't look at total debt, credit score or any of that. We only look at delinquencies and bankruptcies. Having a ton of credit card debt does not bar you, but having 3 lines of credit all 60+ day late will.

We also know that bad things happen to good people so we ignore all medical claims on the report.

Though, now we don't check credit on nearly as many people as we used to, its really down to only one division that wishes to have credit run so it's not a big deal.

@bohemian: Defense screens hard. The idea being if someone has a mountain of debt, they are more likely to sell military secrets.

Thank you for doing this. I'm so sick of people lamenting the FICO score because it could keep people from getting jobs. First off, they'll never look JUST at your credit score. Secondly, in general, only three types of businesses will not hire you based on your credit report. The first is, as mentioned in the article, government jobs and businesses hiring for upper-level management positions. The second is banks. The third is casinos. Businesses just want to make sure, if you are in a position to steal or embezzle money, that you have no obvious reason to.

I have a relatively high credit score, especially for my age. Anyone have thoughts as to which types of jobs something like this is actually a game changer, even going above credentials/experience?

@sirwired: that i can understand but why the need for the check for simple office jobs where you are not privy to sensitive information or funds? If my job is to come in and be a receptionist I don't need my credit checked. Judge me on my skills and job performance not my inability to pay my own bills (past or present).

For white collar professionals, this can be the cause of an unfortunate death spiral. Lose your job and not pay a few bills, you then find it that much harder to get a new job because your credit rating has gone downhill with all the recent late payment penalties on your score.

Nice double whammy, thanks to this.

@cmdrsass: My mother is a bankruptcy paralegal and most of the people that come through her office have gone bankrupt because of medical bills, medical disability, or because they are elderly and can't work.

It's really sad that you would assume that not being able to pay bills makes someone a bad person. Even if a person were just incredibly irresponsible, irresponsibility does not a criminal make. Immorality is.

Do you also think that homeless people don't have homes because they're lazy? It's pretty much the same relationship between economic disability and morality.

@speedwell, avatar of snark: Although a release isn't always a full release.

I wonder how many people here would complain about a company not doing enough research into its employees if that employee screwed something up.

You'd be up in arms and threatening to sue. So whats a biz to do? Your in trouble for doing background checks, and in trouble if you dont.

@KarateMedia: This happend to a buddy of mine. He was actually going to manage one the Radio Shack's in town and they said no based off his bad credit. I personally think this is kind of lame and it should be less legal than it is. What I mean by that is, it should only be used for government work that requires access to high security items(money, info, ect...). I'm sure there are more times when this is appropriate, but not in most situations.

@georgi55: I would like to hire you and pay you lots of money but first I must look through your home to see if there's anything questionable contained in it. Surely you have nothing to hide and would not mind this intrusion, correct?

@lannister80:

However, a security clearance investigation consists of a LOT more than a credit check. People you haven't talked to in years will be visited by strange men who dress and act like Herr Flick from "'Allo 'Allo."

A bad credit score alone is not likely to disqualify you, if your reasons for having it are anything other than dishonesty or stupidity. They will listen to what you have to say about it (and confirm your story). Hell, you can have a criminal record and get a security clearance, if it's long enough in the past and there's no evidence you've ever gone back to your wicked ways.

@GMFish: This is not unheard of, I have a government security clearance and its widely known that if you file for bankruptcy then you'll lose your clearance. If you have poor credit history and apply for a clearance, it will be denied because you "are" more susceptible to criminal behavior. Money talks when you don't have any...

@cametall: When I was an insurance adjuster, I had to have good credit as a job requirement. I assume this was because I was in charge of handling a lot of money and dispensing checks to insureds.

@Adrienne Willis: I have worked as an executive secretary and now I'm in IT. I've been doing this for fifteen years.

I've been called on it twice, once by a temporary agency who refused to work with me because I would not sign their releases (really? give them all my information on the off chance they MIGHT find me a two-week post? Naah). Who cares, the other twenty I applied to just shrugged. Some of them asked me, and I told them (this is true) than I was the victim of identity theft by an unscrupulous HR person. No further problems. I got plenty of assignments.

The second time was after I was hired and started work. They handed me a clean form and told me to sign it. I didn't take the form, and I asked them why they needed the information. They said (you'll get this a lot) "We make everyone do it." I said, "OK, only if you execute a liability release releasing me." Finally they hemmed and hawed and said that since I wasn't going to be handling any money it really didn't matter.

Don't deny a credit check if you really are an accountant or cashier. It does matter then. But don't sign away your rights in a liability release no matter what.

While this practice is the most common in financial and security-conscious industries (think banking, insurance, security and compliance, or anything requiring security clearance such as government work), I *have* seen it in many other areas. Many large companies will include a credit check as a default when performing a background check. Most entry-level jobs won't require it, but I run across a background check requirement fairly regularly when applying for work with companies like Yahoo, eBay, Juniper Networks, etc. Essentially, these companies are doing their "due diligence" and making sure that they're not hiring some psycho with a violent past, or a sociopath who lied about their work history to get in the door. Fortunately for me, they never found out about those 16 people in Texas... ;-)

Seriously though, the background check that they perform usually consists of paying a company that specializes in such things to call all of my old employers, check public records databases, etc. to verify everything that's on my resume. It also usually includes a criminal background check to make sure I haven't done anything horrible like. It also includes a clause that authorizes them to do a credit check to "establish my general character," which can include things like contacting old landlords, friends and family to ask questions about you, and so on. I personally find this clause extremely invasive, and don't take jobs that require it. I could understand if I was working in finance or security, and thus my personal finance history would actually be relevant. But as a web designer and developer, I'm not exactly high-risk for bribery or selling proprietary company data. It just doesn't happen much anymore. Most companies I've worked for have rules in the HR manuals that say turning over proprietary information from another company is actually grounds for termination. So outside of a few industries, credit reports just aren't that necessary.

Before I really knew much about it though, I'd assumed that if they employer wanted to do so, they could. THIS IS NOT TRUE. It's true that you should know what's on your credit report, and clean up anything that's incorrect. But even if there's something bad on there, an employer can't just check your credit because they want to. You have to specifically authorize them to in writing. (You DO read your employment contracts, don't you?) So don't worry about a potential employer randomly doing a credit check. Just make sure you read anything you sign. And remember, a contract is *almost* always negotiable.

About half of the companies that did background checks had a clause about credit checks, but I actually found it very rare that a credit check was actually a part of the background check process. Most of the time, the employer would say that it's "just part of the form". As a result, I ask if I can cross it out and they've almost always said yes - I've only been turned down once or twice in the last 15 years. I've found that the companies least likely to be flexible about this are major corporations who's Human Resources departments tend to treat them like numbers, regardless of company policies. That's not to say that it felt like they didn't care, but the fact of the matter is that when a company reaches a certain size, rules and policies are much less likely to be flexible. HR (whom will be handling the hiring process once your hire has been approved by your actual manager) will be handing you all of the forms and will usually be your point of contact throughout that process. At that point, HR has the power to say yea or nae to any "exceptions" to the rules. In my experience, no matter how much your boss likes you, his or her power is limited in this regard - no matter how much he likes you - unless he has a direct line to the CEO. And even then, sometimes "policies are policies".

Just remember: you catch more flies with honey than with vinegar. Don't walk in and say "Dammit, I'm not signing this piece of trash!" Just mention politely and gently that you completely understand their need to confirm your background, but that you are uncomfortable with your financial information being a part of your employment file, and that you would prefer to put a line through that part of the contract. It usually works. And in the meantime, make sure you clean up your credit anyway, in case a particular job matters more to you than your privacy. (Hey, it happens sometimes.) Good luck!

@georgi55: I had a temp agency HR person take out credit cards in my name several years ago. They had all my credit card information, a copy of my driver's license (for ID verification purposes), and my checking account number (for direct deposit of my paycheck).

It doesn't matter if your credit history is perfect. It might not stay perfect.

@KarateMedia:
I imagine since it was Radio Shack, the shovel you used was a very small one.

@bohemian: Everyone asks. It doesn't mean you have to give them what they ask for. Decent employers usually understand. If a place pushes too hard, that should be a red flag in itself.

@jjason82: They don't. But they ask everyone, just as part of the HR machine, and to have another possible reason to fire you if they need to make up something.

I hire salespeople, and I require a credit check, which would have saved me from hiring a couple people who looked good on the outside, but were scammers. Credit reports show you who is being a naughty and who is being nice - especially to thier kids ! If you hire someone who is apt to blow off his child support payments, not pay his bills, have unpaid tickets, doesn't return library books, and blows off his personal stuff, this same type of person is apt to blow off work.

@KarateMedia: Hmm, think maybe if they paid a decent wage, their cashiers might be less likely to be in a position where they're tempted to steal?