Some HR departments use credit checks to help determine whether to hire an applicant. The practice has always had critics, since credit histories can have errors that are hard to correct, and since there’s no strong correlation between credit history and job performance. But in this economy the practice may be even less fair, notes MSNBC, even though more organizations are relying on it.

The news organization notes several instances where bad news in a credit report may be due to something beyond the applicant’s control:

• Being unemployed (or underemployed) for a long period
• Having your credit limit reduced by the card issuer despite a perfect payment history
• Being a victim of identity theft
• Being recently divorced

The CEO of an applicant screening company says that credit checks are smart if you’re hiring someone who will have access to money or to other people’s data. He also says the checks are usually only used as a tiebreaker when the employer is down to a couple of finalists, although that doesn’t address whether it’s a relevant way to pick a winner.

MSNBC says in general, the practice has been on the rise:

A recent survey by the Society of Human Resource Management found that many employers use credit checks to screen job candidates. Of the roughly 350 employers who responded, 60 percent said they checked credit histories for some or all job applicants. That’s up from 43 percent in 2004 and just 25 percent in 1998.

Credit checks are used most frequently when hiring senior executives, workers with financial responsibilities or access to cash, and workers who would have access to confidential information about other employees, according to the survey.

“Bad credit sidelines some jobless workers” [Newsvine/MSNBC] (Thanks to Tom!)

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