The only characteristic I've seen about people with poor credit histories is a lack of patience or in attention to detail on a regular basis . On the other hand they're not afraid to try things and can forge ahead without thinking about the small stuff . (uh oh -without thinking)

I can see people who had one financial castastrophy like an illness but if a person has a bad credit history from buying champange on a beer budget then there's a problem .

If you are in charge of a budget or have direct access to a budget/money then I MIGHT be leary . I would have to take things on a case by case basis . There's got to be something to this or this still wouldn't be used as a tool . Although the hiring process over the years has gotten unnecessarily complicated at times .

This needs to end, and soon. I'm not sure when the entire world decided it was a good idea to base everything off some report by a third party that won't even disclose it's proprietary method of determining your "worthiness" score, but this has been heading down the wrong road for a long time.

There's no more human element involved any more. You are nothing more than a FICO score. If you consent, they can pick you apart. Even if they don't find anything wrong, they can still use it as an excuse. If you don't consent, then you're "hiding" something and you're denied.

The entire credit & credit reporting system sucks. The best way to not deal with it, is to not deal with it. Opt out. Refuse to use credit, and freeze your reports. And tell your potential employer, your credit report is none of his business, any more than his report is yours.

It's time we stopped bending over and taking it from these credit reporting agencies. They do not serve US. They serve themselves and the CC companies. I still hold out hope that someday somewhere sometime in the future, laws will be passed to put an end to this scam. If everything we do is going to be based on our credit score, then we deserve.... we have a RIGHT to know exactly what the methods used entail. Why is it such a big secret?

The credit score system is quite easily manipulated it really needs to die a horrid death. Credit reports are not bad but the score is what leads to lazy underwriting and unfair discrimination. After all, I should know I rescore and change credit reports all day long. The score is not a fair representation of a persons risk factor. Something as silly as a $10 medical collection can tank an otherwise perfect credit report 80+ pts easily. Oh and contrary to popular belief paid collections don't help credit scores, them being on there in any fashion is the damaging incident.

@FDCPAGuy: While it does make sense to me to have some system in place to track creditworthiness for purposes of home and car loans and such, I do agree the current system is horribly flawed.

Using credit reports as a metric against job performance I feel is nearly in violation of several statutes, including HPAA. (after all, if you go into the hole on medical bills after a major event, would you want your potential employer to know why?)

And the fragility of the credit reports and how easily they are manipulated, the screener would need to see all three of them and be very picky.

Although my credit is fine, I have always had a problem with using credit scoring for employment and insurance purposes. If I'm not in a fiduciary role in my company, my credit score shouldn't matter. I think most people would pay their bills if they could afford to. Do some people live above their means? Yes. However, a lot of people I know have been downsized or (like me) taken a pay cut within the last couple of years. I think as more and more peoples' credit scores decrease we'll see less and less of this silly use of credit scoring.

I think with the housing market and number of foreclosures, there will be a lot more people out there with "lousy" credit. That's great for those of us who don't have bad credit, but at some point they're going to have to figure out another way to measure a person.

I'm in insurance, and I'm comfortable with looking at a person's driving record to determine their rates. As good as my credit is, I've had three accidents in five years and should pay more than someone who has bad credit and hasn't had any accidents. But I don't.

@FDCPAGuy: Oh yea . Not only can the small stuff kill your credit I've known people with almost 50% of their yearly salary in total debt who able to keep a very good rating . They paid at least the minimums until they lost their job .

Personally as long as you are meeting your current obligations with a creditor I don't care . Same can be said as an employee . As long as you can do the job you should at least be given a chance .

I think these HR strategies are frequently designed to find an employee that will not job hop and give you a 30 year career . But long term employment or job security hasn't been reality for years and yet these HRs are using predictors based on a 30 year career and not A job that will probably last 5-10 years tops . If nothing else technology can change the job/market .

@u1itn0w2day:

I disagree. Especially in the current economic climate where credit delinquency is sharply on the rise. A layoff or slow business leading to cut hours can wreak havoc on a credit report but says little about the person other than they were laid off and could meet their financial obligations as a result of this. I work in loss mitigation in a very hard-hit area of the country (central FL - approaching 11% unemployment in some areas) and see it every day. Lately it has been the majority the reasons for delinquency.

You are correct in stating that a case by case approach is the way to handle using credit reporting as a tool to determine the suitability of a candidate for a job position but to say that a few years of using a tool makes it a good tool is a logical fallacy. Blood-letting was used for even longer than credit reporting and was undoubtedly not helpful at all for the patient!

I believe that the issue lies in the fact that most hiring managers do not know how to read the report and make the correct inferences. It takes practice to view the end result of the circumstances in someone's life in the form of payment history and draw any accurate or useful conclusions. Add to this the fact that an inordinately large percentage of credit reports are factually incorrect and you have a tool that does little to help and can actually hinder the ability to find good candidates.

@FDCPAGuy: Yup and you need to be able to check an updated version yourself as much as you want to watch it. I recently pulled mine and had a 90 dollar collection on it because someone join a movie club for Disney movies and didn't pay for them. Been disputing it for about 2 months and the movie club won't give me any info about where they were sent.

@Skin Art Squared: Nobody mentioned anything about using credit scores. One's score is an entirely different thing than one's credit report...which is a completely objective history of one's past credit worthiness. There's nothing "hidden" or "secret" about what's in your report.

@supercereal: It's not objective. If you have something go to collection for whatever reason, maybe it's not even yours but a mistake, YOU can't take that off of there. You are at the mercy of the company that put it on your report.

@supercereal:

I was a victim of full & complete identity theft about a year & a half ago. The assholes that stole it opened up new lines of credit, took out loans, initiated numerous memberships, applied for grants, even changed my MAIL. All of this is on my credit reports, in MY name. I've been fighting this ever since. And while all of the fraud departments are various entities have gone through their own investigations and whatnot, finding me not liable for the charges, it all still remains on my credit reports. Why? Good question. Perhaps they aren't truly convinced it wasn't me and feel it needs to remain on my report, or perhaps they just don't give a shit enough to correct it.

Point is, it's been a year and a half now or constant battle to correct all this, that was done to me by someone else. And to date, nothing on my reports has changed. Now, I want you to explain to me how the hell you consider this to be "objective" of my "worthiness".

Sure, someday it may eventually be fixed, although I've nearly lost all hope of that ever happening. But in the meantime, if I needed to be on the job market or anything else that bases its decisions on my credit report, I hardly think I'm being fairly JUDGED by them for things I had no hand in.

So much for any hope of any kind of privacy.

@tbax929: Employers don't get your score...only your credit detail. Technically, you can dispute any situation where you don't get the job only because of your credit report, but it's not handled well by employers.

@Hobart007: Something like a chronic illness in a family combined with the things everyone deals with like lay offs or stretches of unemployment can cause havoc on credit reports.

If people are under water with medical bills it can cause them to be late on other debts. Medical problems can also lead to unemployment and that can lead to financial problems, late pays and such.

The even larger issue of credit reports is that it can inform employers of things that really are not their business. If they see lots of medical creditors they could refuse someone assuming they will be sick frequently our gone dealing with a family member. What if a debt on their credit says "cancer treatment clinic"? Now the employer knows the candidate had or has cancer. Someone should not be ruled out of a job for surviving cancer. This also starts to go against disability discrimination. If the credit report leaks information about a person's possible disability the employer can now get away with illegally rejecting a candidate based on a perceived disability.

Also if someone was divorced that is none of the employers business either.

Congress needs to ban credit reports as part of employment unless they will be handling money or bank accounts.

@Skin Art Squared: I have a fraudulent debt on my credit report supposedly from Verizon. Verizon says I have no unpaid account with them and my current account is in good standing. This was a scammy collection agency just trying to see if anyone would pay them money. They put it on my credit reports. I have disputed it multiple times and the agencies all come back that it was verified. BS I know better but I can't get it removed.

This tells me the entire system is a failure.

@Nighthawke: I suspect that, in some cases, it is a backdoor way to get health information on candidates, so they can turn down those who've had health problems.

It's not uncommon for companies to do things like add superfluous physical requirements to job descriptions trying to avoid hiring someone they think might take a sick day or use their health insurance. This would be even easier to get away with.

@tbax929: The insurance metric that really floored me was your zip code. We moved zip codes and suddenly our insurance dropped.

@bohemian:

Agreed. But then one can also consider that many people with good credit have been thieves and many without have not. I would be interested in seeing real statistics on this rather than conjecture used to deny people employment.

@bohemian:

Another clue that the system is broken came to me a few months ago at work. We had a tele-conference with our Experian rep regarding properly reporting different odd scenarios that come up from time to time. I spent the week prior to the meeting compiling a list of questions to ask our rep. Well, the teleconference started and every single question was met with the canned answer that they could not tell us as it is considered proprietary information! We report to the bureaus and they will not even tell us (a large credit union) how to properly do so! These were not questions that would require them to divulge any sensitive information but rather which codes should use to have X or Y information appear on the consumer's report. It is ridiculous.

I work directly with compliance departments of various financial brokerages. I didn't mind having my credit pulled, no. :)

@Skin Art Squared: @FDCPAGuy: @Nighthawke:
I'm in 100% agreement with all of what you said. First, the entire credit rating and reporting system is fundamentally flawed. Second, too many items on the report are none of an employer's business, and don't correlate with future job performance. It's rife with libelous and fraudulent information. A prospective or current employer's access to the information is an invasion of privacy. Such an employer should be legally barred from seeking your consent to access your credit report, except in those narrow circumstances where the prospective employment involves holding or managing other peoples' funds.

@bohemian: If you talked to the correct people at Verizon (read: EECB), I wonder if you could get some kind of letter out of them stating you don't owe them anything. I don't think a credit bureau could reject a letter from the alleged creditor saying the alleged debt is bogus.

@bohemian: I think that's more related to theft rates, but zip codes are still a crude unit of measure for that.

@Nighthawke: I think you make a good point about HIPAA. If you have late payments for some specialist doctor, that would definitely reveal some information about your or your families health conditions in violation if HIPPA.

Any lawyers want to take up a class action lawsuit against Experian, TransUnion and Equifax??? Could be worth soemthing to you...

I disagree, there are lots of positions that do not deal with money but that deal with personal information that could be used for identity theft or other bad acts. The receptionist at my doctor is always asking me to fill our forms that include a request for a SS# (which I leave blank but most people don't). There was a recent news story in Miami where an ultrasound tech was selling medical records to a local lawyer (who was engaging in his own ambulance chasing). You wouldn't think that you need to check an ultra sound tech's credit report, but the fact of the matter is anyone who has access or can access sensitive personal data should be carefully screened.

Criminals can have great credit -- all that stealing can pay bills....especially if they are paying their bills by stealing someone else's credit cards.

@SadSam: I'm pretty sure COMMITTING identity theft doesn't show up on your credit report.

@SadSam: I would think, then, that a check of criminal databases would be much more appropriate than a check of credit databases. Show me where poor credit has any kind of relation to propensity for criminal activity. I find it hard to believe that it does.

@razremytuxbuddy:

Well, you're welcome to tell them no, you won't provide them access to your credit report, but they can just decide not to hire you. Basically, employers can make their hiring decisions based on pretty much any criteria they choose, with the exception of certain explicitly prohibited criteria (age, race, gender, religion).

It would be 100% legal for a company to say "we're only hiring gay Republicans whose Social Security numbers include at least two 7's."

@NeverLetMeDown:

The primary reason I refuse to work for other people ever again. There's nothing stopping anyone from working for themselves.

I work for the Canada Department of National Defence and in order to maintain a valid security clearance, which is of course a condition of employment, a credit check is mandatory. They look for signs of massive defaults, or extremely high debt, and evaluate that as a potential risk to security. The concept is if you owe your hiney, have a big out of control gambling problem or have collection agencies after you, you may be more vulnerable to various bad guys or organized crime and sell secrets, access, provide favors or contracts in exchange for bucks or misappropriate public funds.

I can see some value in that, but it has to be carefully managed on a case by case basis. If it came to a job selling furniture or managing landscaping for the city or something, then I think it's none of their beeswax.

Mind you it's not like the applicants have ever much been on the winning side of things. When I tell my Canadian friends that I had to take a drug test before I could get hired at a Wal-Mart in the US they all gasped in horror.

@elcrapitana: It shouldn't be anyone's business to begin with. What do they do with an applicant that has NO credit history? Neither good nor bad? That doesn't tell them anything. This person could swing either way in the future. Or is that person eliminated based precisely on that? The unknown.

Using credit reports is a bad idea all around.

The thing that bothers me is that are many that are going to get a ' get out of jail free card ' from or during these times . I know people who had good credit with 50% of the yearly income in debt BEFORE the crash on ALOT of DIFFERENT things including dinning,recreation & equipment,vacations,music,clothes etc BUT NOT medical bill or mortgage trouble . They WERE disasters waiting to happen .

Florida is a tough state because it's basically a tourist/retirement state . The boom turned a lot of resort areas into just anothe big city . The problem was the effect was temporary from all the construction and related services & spending .

I'd like to see a financial picture of someone before the boom as well . I'll say it again too many WERE in trouble or a disaster waiting to happen before the boom . I hate to say it but many but not all are going to use the economy as an excuse including white collar management who is now crying the blues and yet during the boom they never looked at a price tag . Perhaps this is where a more knowledgable search or analysis of someone's financial picture should come into play- a longer back search .

I also know people that quite frankly were in dying businesses again before the boom but the boom with the associated easy credit kept them alive . I know someone who was with one of those dying but well paying companies and they have priced themselves out of several new jobs salary wise and probably have priced themselves out of a job with all their expensive solutions or ideas . The company was a money making machine util last year and they spared no expense . This person can't handle a tight personal or business budget .

This is one of the big things that I dread about in the US. To buy a house or a car...I need a credit score. It's like as if credit companies want to ensure that you're in debt before you're 25, so even if you wanted to move out of the country, you couldn't, because you'd have to be making payments for the next 20 years of your life in trying to climb out of the hole of debt. I still don't have a credit card, but I'm not sure how much longer that's going to last before I have to make the leap into debt. The land of opportunity indeed--opportunity to get suckered.

@NeverLetMeDown: no, it wouldn't, because sexual orientation is also protected. The government is also prohibited from inquiring about your political views, though I'm not sure if that extends to contractors or any other companies.

However, why is it your right to work for a business? If it's privately owned, why should the owner have to provide a reason for not wanting to hire someone? If someone has a BS reason for not hiring you, then they're giving their competitors and advantage and will fail sooner or later.

@bohemian: That is completely legitimate - bad things in general are more likely to happen in LA than in Podunk, Vermont. For an extreme example, you would certainly expect health insurance to cost more for someone who decides to live in Chernobyl.

@elcrapitana: That's SOP for US agencies as well. If you have large amounts of debt, the viewpoint is that you may be more susceptible to monetary inducements from foreign intelligence agencies.

@NeverLetMeDown:

"Well, you're welcome to tell them no, you won't provide them access to your credit report, but they can just decide not to hire you."

That's why they shouldn't be allowed to ask for your consent. By asking for it, they are unfairly setting you up in a no-win situation. If you give your consent, you're consenting to an unnecessary peek into your private and sensitive affairs. If you exercise your legal right to refuse to give your consent, you don't get the job.

@Megalomania: Yes and I think there is some value to the practice. As long as the reviews are on a case by case basis and are administered fairly, and not some arbitrary formula. I could see how some people may have what looks to be a big problem, but with extenuating circumstances where it's clear the person has it under control and is not a risk.

@Skin Art Squared: As far as I am aware if you have no credit rating, it does no harm. In my case, they weren't checking to see if you manage your money well and have good credit, they were checking to make sure you don't manage your money poorly and aren't a perceived risk with an already significant problem.

Our security clearances get reviewed every 2 to 4 years depending on the level. I think it's an ok system... my main issue though is, with jobs that don't really have much risk to them... which in all fairness is most jobs... it seems silly.

I think for the most part, anyone working with public funds, should be able to demonstrate that they can handle money somewhat reasonably.

@Skin Art Squared: You're being a bit reactionary, I think. They're only looking for negative indicators. The government might be screwy (any government) but you can't expect them to cut out a huge portion of the recently graduated. This particularly when the U.S. government is scrambling to get their claws in kids educated in the STEM fields.

@elcrapitana: The typical HR employee does not have the competencies required to interpret individuals' credit reports and to extrapolate the data to relevant hiring criteria. Moreover, if there are any negative reports, they should be interpreted within the context of the individual's circumstances.

But of course there is no follow-up with individual applicants to learn why something is in one's report, and whether it's accurate.

Just as with airport security games, using credit reports to make hiring decisions is a near-magical, quasi-legitimate approach to solving problems involving diverse people and circumstances. These magical approaches nearly always rely on creating large classes of easily excluded people, and oversimplifying the means by which they are excluded. 3 oz shampoo in a 1 qt ziploc, anybody?

@elcrapitana: In that case, I would like to see public credit reports of anyone who runs for public office since they have more direct control and influence over public funds than I do as a state employee.

@xay: Actually the people they appoint to or delegate to would be more telling .

I think the U. S. Secretary of Labor was 10 years behind on their taxes in Calif and Timmy the Treasury guy had tax problems I believe . Hmmm , current administration spending at a record rate - correlations ? Where's the money coming from ? does it matter ?

GW was a fiscal conservative and even he racked up quite a tax bill .

My whole thing with this is TIMING and as most have pointed out a credit history needs to be analyzed a little more and taken on a case by case basis . Too many get out of jail free cards right now .

I'm sure most know someone layed off etc but BEFORE the boom/bust think about the people you knew with a Bankruptcy or bad with finances and think in detail when they went downhill if at all . Think about their traits and what their credit score was or probably was . I know too many who screwed up on their own before the boom and if you take some of the common traits like no patience , hate detail , short tempered , never worry about price ,always worried about image-that's a big one-everyone I know with financial woes goes out of their way for appearances/image . And all had at least one luxuary/expensive item . I noticed this while working with these people . All spent money on dress or quite fashionable clothing , suits , jewelry , know 2 people who spent alot on their teeth cosmetically all were OBESSED with their image .

On the other hand I know some who have financial hiccups with no problem in their personality-publically anyway .

To an HR what is a bad credit history supposed to represtent or what character trait are they avoiding . Or are they going for what they percieve to be the best overall candidate . Got to admit IF all things are equal except for the credit history I'm hiring the better credit score .

@ChuckECheese:

Don't think that employers are using in-house HR staff to run these reports - I'd say over 90% are using an investigative firm to run the credit/criminal/educational/work reference checks.

That's how my current company ran it, and while it was annoying having to tell them that I had never lived in NC (I have a very common name), it was easy since the background check was a one-stop shop process.

@xay:

You forget that that kind of stuff does happen, maybe not as a condition of candidacy, but how often do you hear of politicians bowing out of a race for some background issue that was discovered by journo's digging through the paper trail.

Also, IIRC Congressfolk have to have a TSII clearance - as a condition of employment - and I imagine that is cleared up well before the swearing-in ceremony.

@u1itn0w2day:

You don't get to see the credit score, actually there are some state laws that mandate a third-party has to handle the background check and report any flags to the ER for decision-making.

Honestly, how would you see how "flashy" or "image-concious" a person is during the course of a few interviews? That kind of stuff is a hindsight sort of thing.

@DollaValueLIFO: I am aware that stuff happens but you may not be aware that it does not happen often enough. And while the person I replied to seems to be concerned about anybody who handles public funds, my emphasis is on the people who can do serious damage.

For my current position, I am required to have a criminal background check every 5 years and sign a loyalty oath. Considering that 14 people have to sign off before I can buy a box of pens, I don't really see where a credit check would help much.

@DollaValueLIFO: Please source the TSII clearance - I cannot find any sources saying that there is a background check involved in taking office.