Why Credit History Employment Inquiries Matter

Last week, we covered a story in which a job seeker was denied a job because of his credit report.

Have you wondered why?

At my last job, during the routine background investigation process, I had asked investigators why they reviewed credit histories. They gave some predictable answers. If you have a lot of debt, you may be more susceptible to bribes or you’re more likely to steal. If you don’t have a lot of debt but are otherwise reckless with money, you might soon acquire a lot of debt and fall into the same trap. Beyond those two tenuous but plausible reasons, there were others I didn’t think of. The prime example has to do with residency and corroborating what your rÈsumÈ claims. If my rÈsumÈ states that I worked at a company in Pittsburgh for five years, I should have a western Pennsylvania address listed as a former address on my credit report. If that address isn’t on my report, it’s possible I’m falsifying my rÈsumÈ.

This underscores the importance of regularly reviewing your credit reports.

If you’re curious what you can do to clean up your image, I found an undated article by Liz Pulliam Weston on employment inquiries. It discusses what you can do to clean up your report, what protections you have under the Fair Credit Reporting Act, and what you can do if you are denied a job because of your credit.

Also in the article, she talked to James Lee, chief marketing offer of ChoicePoint Inc., which does background checks. According to Lee:

Credit has not turned out to be a good predictor of workplace theft. This is what our customers are telling us, anyway, Lee said. A better predictor is a criminal history involving bounced checks.

So while they’re not a good predictor, employers are still checking anyway. Incidentally, bounced checks are reported on specialty reports offered by ChexSystems. You’re given the same free annual right to review those reports as you are credit reports.

Have you ever been denied a job because of your credit?

Jim writes about personal finance at Bargaineering.com.

(Photo: pyxopotamus)

Comments

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  1. pecan 3.14159265 says:

    It can backfire though, and not through the applicant’s fault. I have a friend who spent some time working with a historical society and because of shoddy record keeping and budget constraints, there was very little record of her employment there, and anyone who knew of her work there had moved elsewhere. So even though it says X on her resume, and she had an address in the area, there wasn’t record of her work and the hiring people had find a way to sort that out and confirm her resume.

    • Eyebrows McGee (now with double the baby!) says:

      @pecan 3.14159265: I had a problem with my bar application because I reported that I worked as a RA for a particular prof for like 7 months, which I had, and the school reported that I worked for him during 3 summer months, which is their standard report for ALL RA positions regardless of how long you worked an an RA. This raised a question about my honesty, and involved me getting signed statements from the professor, the dean, the payroll people, and signing an affidavit saying I really, really worked for the dude for 7 months and no I was not shitting them.

      I was like, “SRSLY, law school? SRSLY? This has never before come up as a problem? Or do you just not care if you screw graduates?”

    • Etoiles says:

      @pecan 3.14159265: I had a similar problem after finishing college.

      I worked for the university while I was an undergrad, 20-30 hours a week during term and full-time during summer and winter breaks. Then I went to grad school elsewhere.

      18 months after finishing college, I was heading into the end of grad school and applying for jobs. I wasn’t allowed to do anything but TA while in grad school (long story, terrible administration, department head who got ousted despite tenure) so I was going back to my college job for references.

      Only… in that 18 months, the university had disbanded the department. The functions were taken over elsewhere, but all of the full-time (non-student) employees who had been there had either retired or left the university. Out of 7 staff members who could at least have verified that I’d worked there for 3 1/2 years, not a one was still reachable by any contact info I had.

    • Garrett Manion says:

      @pecan 3.14159265:
      how does a historical society not keep records of their own business affairs like that? you’d think they would be pretty good at something like that.

      • pecan 3.14159265 says:

        @Garrett Manion: It happens. You have four people to do the work of six, you lose paperwork, things get shuffled, etc. It happens to a lot of places.

      • Clumber says:

        @Garrett Manion: Similar corollary to the bankruptcy of the Psychic Hotline (or whatever it was called, a few years back. I think Dionne Warwick was involved?) you’d think they would have seen that coming…

    • Brady Cox says:

      @pecan 3.14159265: Yeah, I almost didn’t get a job once because a company I had worked for previously is now out of business and they couldn’t confirm I had worked there. It doubly sucked because the letter of reference that I had was from that company too.

  2. bloggerX says:

    Hmm…didn’t knew Chexsystems keeps a report on bounced checks, I thought that was a bank thing.

    • Gramin says:

      @bloggerX:

      The banks report bounced checks to ChexSystems. Just as you can be denied a credit card for poor credit, you can also be denied a checking account for too many bounced checks. With the prevalence of debit and credit cards, checks are becoming obsolete so you hear less about ChexSystems.

      • bloggerX says:

        @Gramin: Oh yeah, I forgot about that. Worked for a credit union and completely forgot!

      • mac-phisto says:

        @Gramin: not entirely accurate. banks report “closures” to chexsystems – these are accounts that are closed with an unpaid balance. the reason for the balance could be checks, deposit fraud, debit card use, etc., so it’s not contained solely to “bounced checks”.

        chexsystems is owned by FIS, as well as their sister operation, certegy, which actually maintains a database of bounced checks at their member merchants. the two operations are managed independent of each other, but you can gain access to both databases for verification purposes.

      • Bs Baldwin says:

        @Gramin: Banks don’t report bounced checks to ChexSystems, they report you to ChexSystems if your account was closed at a loss. They give ChexSytstems a reason why, and mishandling account (large amount of NSF Items) is one of the reasons.

  3. savdavid says:

    While I don’t blame a company for wanting to hire good employees I don’t believe what this person is saying. I think there is something else going on.

    • pecan 3.14159265 says:

      @savdavid: What? Discrimination? I just don’t see how potential employers running background checks that include credit checks are indicative of discrimination across the board. Certain federal government agencies run credit checks all the time. It doesn’t mean they’re discriminatory, or only want X race working for them.

      What’s wrong with raising an eyebrow to someone’s mounds of debt and potential for financial catastrophe?

      • mac-phisto says:

        @pecan 3.14159265: b/c there’s no known correlation between a person’s ability to do a job & their “mounds of debt”?

        even donald trump has filed personal bankruptcy twice & has a history of not paying his bills, but he’s still one of the most successful businessmen of our time.

        • dragonfire81 says:

          @mac-phisto: I think part of the problem is that so many people lie/embellish their resumes to the point where they only become a shell of the truth.

          As a result, a company hires a candidate that looks stellar on paper but in reality is anything but. Hiring and training are significant costs for a company, I don’t blame them for wanting to be picky about who they bring on.

        • MostlyHarmless says:

          @mac-phisto: On the other hand, if I had two candidates, both of them about the same in credentials, and one with a crappy credit report, and the other one with a clean record, i’d hire the one with the better report.

          • mac-phisto says:

            @MostlyHarmless: ok, but that still doesn’t mean they’re a better worker or that they’re a “safer” hire. this type of faulty logic is the basis for virtually every measure h.r. uses to gauge what constitutes the perfect employee.

          • Mirshaan says:

            @MostlyHarmless:

            why exactly?? Why does that matter?

            Couldn’t the “Good Credit” worker is just a trust fund kid, or someone who’s family still pays the bills for him/her and keeps their credit spotless through no efforts of their own? What about the guy who has spotless credit b/c his wife is good at making sure the bills are paid, but he couldn’t exist w/out her?? Would that make them a better worker?

            Couldn’t the “Bad Credit” worker just be down on their luck, looking for a break, and hungry to get back on their feet and on top? Why does this person become less desirable to be employed? Perhaps they have gone through a bad time and got behind on things… divorce can destroy the credit of otherwise very hard-working, bill and tax paying citizens….

            Credit really has NOTHING to do with how good or bad a worker will be. You can make some assumptions from credit reports, but really…. that’s all they are… assumptions.

            • Mirshaan says:

              @Mirshaan:

              ugh… horrible grammar in that… my kingdom for an edit button… :(

            • MostlyHarmless says:

              @Mirshaan: Interesting points, but speculative, nonetheless.

              Bad things on the credit report is a sign that something went wrong. More often than not, its the fault of that person. Looking at other parts of the resume/applicant information would also give a good idea.

              Though I will concede, that not all spots on the credit report are equal, and any reasonable employer would take other factors into account. For instance, I would not hold it against the guy if he made a late payment or two when in college. I would also give the other person a chance to explain the incidents. If it looks like it is not his fault, then I would be willing to overlook that.

              You are assuming that HR simply looks at a report, sees it has one late payment, and simply throws it out. I doubt if that is the case.

              Another thing to remember is that interviews are about snap judgment and they are definitely more of an art, than a science. Even if you have 5 rounds of interviews, it is still difficult to predict with 100% accuracy how the employee will turn out to be.

              An applicant with all good credentials might still turn out to be a bad employee. But if you hire someone despite the red flags, and something goes wrong, people will give you dirty “i told you so” look at best, and will be calling for your head at worst.

              Short of a 5 year internship, there really is no other sure fire way to weed out applicants. Ergo, people choose to be safe rather than sorry, and go with the cleanest choice available.

              Is it always fair? Nope. Does it work 90% of the time: Yep. Do you have a better way to do it? Lemme know if you do.

              • mac-phisto says:

                @MostlyHarmless:

                Does it work 90% of the time: Yep.

                & i’m sure you have the statistics to back that claim up as well, right? except you don’t, because you never really know if you hired the best candidate for the job. at best, your knowledge is limited to whether the person you hired was sufficient or not.

                if a credit report is useful for anything in h.r., i’d have to say it would be pre-determining a candidate’s compensation desires, but even that’s not foolproof if you don’t have access to more personal information that you can’t legally ask for (married? kids? paying alimony or child support?)

                • MostlyHarmless says:

                  @mac-phisto: Well do you have a better way of screening candidates other than interviews?

                  • mac-phisto says:

                    @MostlyHarmless: yeah, take them to a casino. you can learn everything you need to know about how good an employee is going to be at a casino. do they take risky bets? are they calculated? are they too conservative? do they know when to stop? do they spend all day in the buffet?

                    that may sound facetious, but i’m completely serious. you’re taking a gamble; they’re taking a gamble – what better place to do that than at the gambling factory?

                    this may offend you a bit, but personally, i think too much time, energy & money is spent in the hiring process altogether. we’ve built an entire department around trials & tribulations of questionable worth created solely to make a game of eeny-meeny-miny-moe seem a bit more scientific.

                    you’ve already stated that the only really good way to determine if someone is a good employee is by having them work for you already. & yet, employers rarely hire from within anymore. why exactly is that? the one sure-fire method to determine a person’s worth & it’s almost completely ignored – in some cases it even disqualifies you from the candidate pool.

                    that’s the absurdity of human resources: a multiple-choice personality quiz & a credit report hold more weight than a decade of positive quarterly reviews from the same company looking to fill the position.

                    • MostlyHarmless says:

                      @mac-phisto:

                      “this may offend you a bit”
                      Now why would that offend me?? Though coming to think of it, you might have thought I was in HR or some sort of hiring, process… i am not. I am infact on the lowest rung of the software development effort. (Higher than the testers and the documenters, but who talks about them anyways).

                      I like the idea of taking them to a casino. Try selling that idea to a ceo :P

                      And finally, any company that gives you the finger because you have worked with them for 10 years probably isnt worth working with anyways. Unless they have a legitimate reason for it. (A very specific post, and looking for new ideas not reeked in company culture would be one scenario.)

                    • mac-phisto says:

                      @MostlyHarmless: my bad. you certainly had me fooled. as you state, there are legitimate reasons for seeking outside candidates & i don’t begrudge companies for that. but it seems as though that practice has been expanded beyond its practical bounds. i suspect u1itn0w2day is more on the money – managers would rather plug in a purported expert than expand on the knowledge-base of an existing employee simply to reduce costs. whether or not that’s an effective way to save money is probably impossible to quantify.

                      @bwcbwc: i think i’d hire donald just so i could fire him. XD

                      also, here’s a decent checklist of hiring questions. –> [smallbusiness.findlaw.com] it’s generally not illegal to ask personal finance questions, but when you start getting into more personal questions surrounding family, you can set yourself up for some pretty serious legal issues. still, employers are very crafty in their methods of ascertaining what they want to know.

                    • u1itn0w2day says:

                      @mac-phisto: I’ve also wondered why many employers don’t promote with in as well . I think not many US companies want to really train anyone nor do they want to foot the bill for you get a degree or take some businesses and/or tech courses . The want pretrained employees almost to the point of being a contractor .

                      I think the biggest thing is criminal background check and did the applicant tell the truth on application . People get around that all the time in management especially making a fellow manager or old manager their supervisor on an application .

                      On the other hand things can change since when you originally applied with the company . I’ve heard stories of employees being denied management by declaring bankruptcy after their original hiring . That I don’t mind as much YOUR credit history being used to determine YOUR salary . Not every bill you pay is with someone who reports you to the credit agencies – I also hate the question ‘ how much do you need ‘ – don’t ask desired salary if you are going to ask that . I’d rather be disqualified because I asked for too much pay rather than have to deal with those tactics .

                      I also hate the question do you rent or own (it’s a different issue but I’ve always heard many HRs prefer people who own houses or have a mortgage to pay rather than renters) .

                • bwcbwc says:

                  @mac-phisto: You don’t have to hire the “best” candidate. You have to hire a candidate who can do the job. Anything else is just gravy.

                  Also, I don’t think it’s illegal to ask those questions about personal finances, it’s just illegal to require an answer.

                  As I mentioned in another thread, I think the resume verification is the real reason for the credit checks. If you catch them in a lie that can be outed by a credit report, they’re not just dishonest, they’re stupid.

              • DeeJayQueue says:

                @MostlyHarmless:

                You are assuming that HR simply looks at a report, sees it has one late payment, and simply throws it out. I doubt if that is the case.

                Yeah, but a lot of times that IS the case. If a company has a dedicated HR department, they probably see at least a hundred resum√©s a day. They’re looking for a reason, any reason to make that number go down. Any black mark, any reason whatsoever to just put your resume in the shredder without looking at it, is good enough for them. That’s why you don’t address resum√©s to the HR department. You do research and find out who your boss would be and send it directly to them.

            • bwcbwc says:

              @Mirshaan: I think the real story is the “resume verification”. If a credit history is really bad over the long term, it might be worth noting for employment purposes, but the resume verification gives a direct indicator of the prospective employee’s honesty during the hiring process. Bad credit history can be due to bad cirumstances or poor money management in addition to outright dishonesty. But if they’re going to lie to you on their resume, they’re definitely willing to “do anything” ethical or otherwise to get ahead.

        • bwcbwc says:

          @mac-phisto: I agree with your main point, but if I were an employer I don’t think I’d hire the Donald in any capacity.

  4. Jozef says:

    I’m wondering how people without any credit history are treated. When I asked Equifax for my free annual credit report, they didn’t even have me in their database (even though I’ve never had any credit card, mortgage or loan, I assumed they’d have my payment history for utilities). I got all my jobs through my connections, but in time I may apply for a new position in a company I don’t have contacts in. I’m wondering whether the lack of any credit history would hurt me or not…

    • pecan 3.14159265 says:

      @Jozef: I think it would be quizzical because almost everyone has some kind of credit history – so they’d probably just look at you as some kind of exotic credit-less zoo animal. Or they’d think they made a mistake or the system was broken. And they would wonder why you never had a car loan or bought a house or even had a down payment for an apartment.

      Heck, cell phone companies run credit checks. Apartment complexes run credit checks. No offense – I’m just finding it really difficult to comprehend how you don’t have any credit history. Don’t bank accounts factor into credit history in that they show up on credit reports?

      • dragonfire81 says:

        @pecan 3.14159265: Not necessarily. A recent immigrant would have no credit history and need to find work.

      • Jozef says:

        @pecan 3.14159265: As dragonfire said, recent immigrants may not have credit reports. However, I’ve been in this country since 1995, so I’m not all that recent anymore. However, over the time I always paid with cash – that included all my cars. You are right; my wireless carrier checked my credit report and when they didn’t have any credit history, I had to deposit 6 months worth of monthly charges with them. Same with my apartment complex, even though the deposit was relatively smaller. And the same with all utility companies. I’ve got enough deposits tied up with various companies that if I ever decided to go back to Europe those deposits would cover all my moving costs (a slight exaggeration, but not too over the top). However, because I’ve never owed a single penny to anyone and use almost exclusively cash or personal checks, no entry for my SSN was apparently ever created with Equifax.

      • Kimaroo - 100% Pure Natural Kitteh says:

        @pecan 3.14159265: Bank accounts don’t show up on your credit report unless you’re delinquent/in collections with them.

        The same thing applies to apartment rent and paying normal bills like utilities, and cellphones. All of these positive/on time payments are never reported.

        You wouldn’t have a credit history unless someone extends you credit of some kind. The only thing that would come up is your name/address and any hard inqiries you have had on your report.

        • oneandone says:

          @Kimaroo: If it weren’t for credit cards & student loans, I wouldn’t have a credit history, despite 10 years of paying cellphone bills, rent, health insurance, cable/internet, and taxes.

          Guess those student loans are a mixed bag, since they are crushingly large, but are the only thing making me a real person in the eyes of whoever checks my credit history.

    • rpm773 says:

      @Jozef: I’d assume that, generally speaking, people with little or no credit history (eg new grads, immigrants, etc) wouldn’t be hired into positions where a strong credit history is needed. Or, perhaps, people hiring for positions typical of that set would overlook a few transgressions in the candidate’s past.

      • RandomHookup says:

        @rpm773: I’ve done lots of these professionally. Usually, the main thing is that the record be clean. The only thing about an “empty” credit history, is that it might raise eyebrows if you are in your 30’s, but that’s about it.

    • csdiego says:

      @Jozef: I wonder the same thing. I’ve been hired for the last two jobs I applied for, but when I checked my credit score recently I found that the only dings on it were things that wouldn’t (or shouldn’t) bother most employers: mainly, not a long enough credit history or enough of a credit limit. Then there were a couple of late student loan payments five years ago. No mention of the fact that I’m debt-free or my record of paying phone bills on time. My credit score is not fabulous (in the 600’s) but I wonder how much it would really weigh on my chances of employment, given that my financial picture is relatively solid.

    • usa_gatekeeper says:

      @Jozef: 80-something year old mother doesn’t show up on any of the three agencies … even though she receives SS & pension checks and has a checking acct w/ an unused debit card (but no credit cards or debt).

    • AustinTXProgrammer says:

      @Jozef: Apartments and utilities won’t show on your report beyond inquiries, and those are only recorded if they find a file.

      If you default the collections will put you on the credit report, but they certainly don’t routinely report positive data.

  5. StutiCebriones says:

    “Theft”? How many boxes of paper clips would it take to pay off that weekend in Las Vegas someone would like to forget?

    • madanthony says:

      @StutiCebriones:

      You do realize that some people have jobs that expose them to large amounts of money – banking or investments where they have access to lots of peoples accounts, payroll or accounting or bookkeeping jobs, or jobs where you have purchasing authority to buy hundreds of thousands of dollars worth of stuff?

  6. Geekybiker says:

    I suppose they figure that responsible with credit = responsible in other areas of your life. The whole more likely to take bribes etc only really makes sense in a few specific jobs.

    Even though I have great credit, I’m annoyed that your credit report is taking over yet another aspect of your life.

  7. frank64 says:

    People from different ethnic groups such as Vietnamese do not always use traditional banks especially for loans. I have seen very well established professionals who do not have credit cards. This makes getting a mortgage more difficult.

    • Andrew Farris says:

      @frank64: I realize what you posted is true frank, but what is the point? Of course people who do not use the current established financial market system do not get benefits from it. If those people want to obtain a mortgage, they have options through non-traditional means. The rate and terms may be terrible through the local mafia but everyone has the same set of options to establish a credit history.

  8. mac-phisto says:

    Have you ever been denied a job because of your credit?

    ^^one of my biggest issues with this whole practice. employers rarely tell you why you weren’t hired, but if credit was a factor, they should be sending you an “adverse action” report which includes the reasons you were denied as well as the right to access a copy of your free report. failure to do so is punishable by a fine.

    has anyone ever received one of these reports from a potential employer b/c they were denied a job?

  9. larrymac thinks testing should have occurred says:

    My resume says (correctly) that I’ve worked for a company in Troy, MI for the last five years, and I haven’t been anywhere in Michigan for at least 15 years.

    • tdatl says:

      @larrymac: I could see that. I work in one of my company’s two offices, but of our ~1200 employees, all but about 100 of us work either from their homes or at client sites dispersed throughout the country.

    • Andrew Norton says:

      @larrymac: I can top that.

      I’ve been working for a Dutch company (only 3 of us in the company) for the last 2 years. I’ve never been to Holland, although I’m British, and moved to the US 6 years ago.

      I also have no credit report. My cellphone is a familyplan with my wife, in her name, as are our utilities (mostly taken out while I was getting my citizenship). The only account that’s ever been in my name, was our first telephone line when I first moved here with Alltel, and that was tied to my passport number, not my SSN (because I didn’t have an SSN)

      It’s funny, credit reporting company will have no record of me (I prefer late 80s/early 90s cars, HATE credit cards, rent from individual landlords who tend to live in the same area and take pride in their properties etc).

      The other fun thing, is that 6 of the last 8 companies I’ve worked for, over the past 13 years, have now gone bankrupt, or otherwise ceased trading (the other 2 are a TV show which is not a field I want to go back to, and a classified govt. project.)

      Credit report? they can try…

      • Rectilinear Propagation says:

        @Andrew Norton: Even if the cell phone and the utilities were in your name it wouldn’t matter unless one of those accounts went into collections. Just having those accounts doesn’t show up in your report.

  10. HungryTuna says:

    Checking your Credit Report is done to weed out bad candidates. If you can’t manage your own finance what makes you think that I’m going to trust you managing a corporation’s finance?

    • Skaperen says:

      @HungryTuna: “can’t manage your own finance” applies to some portion of those have bad credit ratings. Do YOU know how to sort those out from all the others with bad credit ratings for other reasons, such as a major medical crisis in the family? Do you even bother? Do you even care?

    • oneandone says:

      @HungryTuna: It’s a stretch to say that your credit report is an accurate description of your financial situation. All it shows is if you’ve repaid/are repaying money you’ve been loaned, and if anyone has tried to collect money from you but has been unsuccessful. Those might be useful things to know about someone – especially if you’re about to loan them money – but it is not a picture of your financial situation and in many cases has nothing to do with how well someone ‘manages their finances’.

      Stretching credit histories to provide broader information than they’re suited for is a terrible practice, and these kinds of minisinterpretations are why I think the credit reports should be much more strictly relevant. If it’s becoming some sort of magic document that reveals all useful information about me, the companies assembling it had better get their act together.

    • Mirshaan says:

      @HungryTuna:

      And what about those who are going thru hard-times, tradgedies, divorce, medical issues, etc…. Credit is a slippery, slipperly slope and while it takes forver to get it up, it only takes a little slip to lose a good rating.

      Also… how are you sure that the candidate is the one taking care of the finances?? What if that good credit rating you’re seeing is just a reflection of how good whoever pays the bills is in that household??

      What if Bob here has great credit, but is married to Suzy who pays all the bills on time, every time while Bob relaxes on the couch sipping beer? Does that mean HE is a better employee than Fred over here w/ marginal credit, who is a bacheolor and handles all his own finances solo?

    • MrEvil says:

      @HungryTuna: Oh, I’m sure Bernie Madoff and all the other Ponzi Schemers just have TERRIBLE credit reports.

  11. sir_eccles says:

    “If my r√©sum√© states that I worked at a company in Pittsburgh for five years, I should have a western Pennsylvania address listed as a former address on my credit report. If that address isn’t on my report, it’s possible I’m falsifying my r√©sum√©.”

    Unless you work remotely using the intertubes to connect to the office and live in a different state. I live in NY and the office is in IL.

    • Andrew Farris says:

      @sir_eccles: Then your resume should clearly say you are a telecommuter and do not work at the physical location. The point is that claiming to work at a location should be accompanied by verified address somewhere within driving range… or a very good explanation should be needed.

      • bwcbwc says:

        @Andrew Farris: Exactly. You worked _for_ a company in Pittsburgh, but you worked _at_ your home address. Same thing for folks who work for the megacorps. Just because IBM is headquartered in NY, doesn’t mean you work in NY.

  12. Trencher93 says:

    Well, don’t most people file bankruptcy for medical reasons? Seems like that was in the news very recently. Wouldn’t getting a credit report on someone be medical discrimination?

    • pecan 3.14159265 says:

      @Trencher93: I don’t think it says on your report why you filed for bankruptcy, so the candidate should try to explain. I believe it’s medical discrimination if the potential employer rejects a person because of their medical history, but a credit report doesn’t have anything to do with that.

    • RandomHookup says:

      @Trencher93: In most cases, the entries on a credit report only show the creditor’s name and amount, not the reason. The fact you have a debt in arrears is the reason you might be denied the job, not the nature of the debt (unless you are stupid enough to run up big bills with HARRY’S HOUSE OF PORN and S&M LEATHER GOODS).

  13. pecan 3.14159265 says:

    On the topic of recent immigrants – yep, that’s the shake. No credit history to speak of, but most potential employers are going to know that right off the bat and shouldn’t expect you to have credit because you haven’t even lived in the country for too long. And if you have lived in the country for pretty long, there are valid reasons for being “off the grid” but should not necessarily hinder your chances of getting an established job in a higher field (i.e. not waiter jobs that a lot of immigrants are locked into).

    For immigrants who don’t use traditional banking systems – that’s the shake. You come to America, you want jobs in tech, finances, anything that isn’t liable to be under the table or a menial job – you have to use our banks. Stuffing a coffee tin with money might have gone well in other countries, but in America, you have to work with the systems you’ve chosen to adhere to by the act of immigrating here. My grandparents had to do it, my parents had to do it.

  14. jkinatl2 says:

    SERIOUSLY looking forward t going back to work after a 17 year hiatus due to advanced HIV disease and the abysmal credit that goes along with that (repealed) death sentence.

    Is the correct term fries WITH that or fries with THAT? Post-grad counselor wants to know.

  15. pecan 3.14159265 says:

    Another aspect to factor is that it’s very possible that a credit report does not correlate to job performance, but having a bad credit report and current debt may affect a candidate’s chances from an emotional aspect. If a potential employer thinks you’re a stellar candidate, but you’ve got significant current debt and longstanding debt, the employer may wonder whether you’re committed to the job 110% or you may be worrying about your finances while you’re on the job, and would be distracted by your money problems.

    Not saying it means that potential employers should only use that as a yardstick for hiring, but I’m sure it happens. If they don’t get the feeling that you take care of yourself financially, they probably don’t get the feeling that you won’t get sidelined by your difficulties at home. No one wants to hire an employee and get all of that baggage to go along with it. They can’t account for everything, of course, but if they see that this is the one thing they can control, I bet they would try to get the least worry-free candidate (in their eyes).

    • ChuckECheese says:

      @pecan 3.14159265: So society is supposed to make important decisions about its workforce based on your untested armchair surmisings. My sister, who is a hiring manager at a medical practice, says the most common reasons for the failure of her employees are family problems, substance abuse, and “not showing up for work on time, or at all.” From this report, it appears that people worry most about their families and their fixes, not their finances.

      Credit histories don’t measure “emotional aspect,” whatever that is. Employers who make unproven assumptions by reading wildly between the lines of a credit report are shortchanging their company and their other employees. It also means that the employing managers are irrational and probably cannot be trusted to make good management decisions, since they cannot grasp what are appropriate evaluation criteria in any given situation.

      These days, the shrinking economy has taken down many competent workers, and left them with no means for paying their bills, leading to poor credit. What employers are really doing with credit reporting is using it as a false shorthand for making decisions they should be making through careful consideration of workplace characteristics, personal interviews and reference checking. But the American employer is too cheap and too lazy to make the effort.

      You may be surprised to learn that there exist many verified and reliable tests of workplace competence that can accurately measure characteristics such as punctuality, cooperativeness, dedication, and ability to learn on the job–even soft characteristics like customer service skills and willingness to narc on other employees who are doing wrong.

      Again, employers are looking for shortcuts that allow them to appear that they’re doing the job, even when they’re not. Credit histories have been shown to have no statistical relationship to workplace characteristics, and from that perspective must be seen as a whitewash.

    • floraposte says:

      @pecan 3.14159265: It seems to me you’re talking about why HR would wrongly believe it affects job performance, though. If it doesn’t correlate to job performance, then it…doesn’t correlate. It’s no more genuinely useful a predictor than astrological sign.

  16. Adam Gingras says:

    long story short I was working for Royal Bank when my job got outsourced to India (tech support). I applied for an internal posting within the company and was offered the position since I had good standing within the company pending credit and criminal (they only had prevously done a criminal check)

    lo-and-behold I was declined with no reason stated

  17. UliKunkel says:

    I never understood this. I just don’t se how this is NOT a form of discrimination.

    • madanthony says:

      @UliKunkel:

      because having bad credit is not a protected class.

    • ratnerstar says:

      @UliKunkel: It is a form of discrimination. It’s just not a form of illegal discrimination.

      Employers discriminate all the time. They discriminate against unqualified applicants, hopefully, but also unattractive ones, unpleasant ones, poorly dressed ones, ones who attended the “wrong” schools, and ones with bad credit. Unfair, perhaps, but that’s life for ya’.

  18. East_Coast_Midwesterner says:

    My roommate was FIRED after a merger because of his horrible credit.

    Oh State Street he barely knew ya.

  19. u1itn0w2day says:

    I sorta understand the logic behind it including fact verification but it still sounds like profiling to me .

  20. Trotsky says:

    My credit report has woefully wrong information, not to mention all the crap from an employer a few years back that I’m in a legal battle against. I tried to “clean everything up” but it just gets switched back within a month.
    We need to do something about this B.S. When did this commercial document, which is run by for-profit corporations, that don’t even match 90% of the time, that is not even correct most of the time, where any schmo can report something and you can’t do a goddamn thing about it become such a be all, end all?
    It’s ridiculous is what it is.

    • Rectilinear Propagation says:

      @Trotsky: That’s my problem with this. Forget discrimination and profiling: credit reports are wrong. They’re making hiring decisions on faulty information and the worst part is that they KNOW it’s faulty information. I find it hard to believe that HR people are somehow immune to having errors in their own credit reports.

  21. sashazur says:

    My current employer apparently did a credit check or a background check on me, because after they hired me and I came in for my first day orientation, the HR rep told me that they had noticed I had an unpaid Amex account from about 10 years ago, but didn’t think it was worth worrying about. I’m glad they had that attitude, especially because that information was wrong! I’ve always paid things off and my credit reports are clean.

  22. jayde_drag0n says:

    just fyi, there are people who do that thing called “commuting” in CA it was very common for people who would live in Sacramento and commute to SF for work.. or live in amador county and commute to Sacramento or Stockton (1hr drive) i commuted to college when i lived in amador county to Delta college in stockton (1hr) there are also many people living in bakersfield, commuting over the grapevine into LA.. you don’t always live close to your work

  23. riverstyxxx says:

    This is an outdated employment method, thanks to Identity Theft. They should pass a law prohibiting credit checks.

  24. DeeJayQueue says:

    I can sorta see reasons why employers want to check your credit, but I don’t think it should have nearly the weight that it has. For example, if your report is accurate, but not great, I don’t think that should bar you from getting a job. For instance, my credit report shows a bunch of charged-off debt. It’s tough to track down who owns the debt rightfully, and attempts to get the original creditor off the report have failed. It’s about to drop off on its own, but the collectors will still list it as current. In the time since then (give or take 7-8 years) I’ve gotten much more responsible and better with finances, but haven’t been able to address that debt yet. Should that mean that I won’t be elligible for a job now? There’s little forgiveness in a credit report, and little usable information of much interest to an employer.

    If I were an employer I’d be way more interested in criminal records than credit reports. What about people with little to no credit? I know several people who’ve never ever had a credit card, pay for most everything they can with cash, and live a pretty spartan life. They’re incredibly honest and hard working but have an atrocious credit report because they don’t believe in owing money. Should that preclude them from getting hired?

  25. HogwartsAlum says:

    I had an interview for a job once that went EXTREMELY well. The HR lady liked me, I liked them, and everything seemed okay. The actual interview with my potential boss went swimmingly.

    Then I got a card in the mail that said Thanks but no thanks. I was very puzzled so I called the HR lady and told her I was wondering if there was something I could have done differently, or not at all, that might affect future interviews. Of course I was thinking a bad reference or something, but she had no clue. I wonder if it was something like this that she hadn’t seen. This was after a little over a year of unemployment and my parents were helping me pay bills, along with temping and so forth.

    Oh well.

  26. JessicaJessica says:

    The people who get burned are those who are saddled with debt from a former spouse or roomate, through no fault of their own. One example that comes to mind is a school teacher of mine who was married for five years to a woman that had secretly taken out various loans and credit cards in his name throughout the marriage. The payment record on the various accounts was sporadic and then became non-existant towards the end of the marriage. Credit cards cancelled due to non-payment, loans defaulted, etc. The couple divorced and he was saddled with the debt that was all in HIS name. Even though he did receive assets from the marriage that would help to pay off the debts, the bad credit history remains.

  27. Bs Baldwin says:

    I work for a bank, so collection notices and a slow/delinquent pay history would weigh heavily against an applicant at my work.