Illinois Sort Of Ends Pre-Employment Credit Checks, But Not Really

Some experts claim that there’s no connection between poor credit history and poor job performance. That doesn’t stop employers from evaluating applicants based on their credit reports. The governor of Illinois signed a law this week prohibiting employers from hiring on the basis of credit checks…but there are some pretty big exceptions.

Employers can conduct background checks of all prospective employees, but only check the consumer credit of people applying for or eligible for promotion to certain types of positions. Those exceptions are:

Under the new law, employers may access credit checks under limited circumstances, including positions that involve: bonding or security per state or federal law; unsupervised access to more than $2,500; signatory power over businesses assets of more than $100; management and control of the business; access to personal, financial or confidential information, trade secrets, or state or national security information.

In other words, pretty much the same circumstances under which a company would bother to get a prospective employee’s credit report. But it’s the thought that counts, Illinois.

Governor Quinn Signs Law to End Pre-Employment Credit Checks [Press Release] (Thanks, haggis for the soul!)

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  1. DariusC says:

    The government does credit checks with pretty much any position. The most common reason people get turned down for secret/TS/public trust positions is because of finances, not their background. This is common in Contracting… if someone goes bankrupt, they have to change their AFSC/MOS because they may be more willing to “negotiate” with contractors.

    • NarcolepticGirl says:

      They do do credit checks… but depending on your position/level of clearance, they may or may not care.
      I know this because i have horrible credit and was worried about then when getting hired. It didn’t affect me at all. But if I end up needing a higher clearance or in the situation where I’m in charge of a credit/purchase card – I know I wouldn’t get that position.

      It also can depend on the amount of debt you owe. if you owe $450,000 in debt and are working in a top secret area, they may not hire you because you could easily want to trade secrets to clear up your debt.

      • NarcolepticGirl says:

        excuse typos

      • Nigerian prince looking for business partner says:

        It’s been my experience that negative credit information doesn’t really matter, as long as you are open about it and have a reasonable explanation for it.

        • UCLAri: Allergy Sufferer says:

          Depends on the type of clearance. It can definitely kill you in intelligence (getting a TS:SCI w/ a bankruptcy recently can be… not easy), and can even do you in for run-of-the-mill TS.

      • CTrees says:

        Right, it’s pretty much only: do you have debt? are you paying it off reasonably/is it beyond your means? are you honest about all of this? Is it gambling related?

        And otherwise, they don’t much care. I have NO credit history to speak of (I’m young), but nothing *bad,* and they were just fine with me at… a high clearance level, handling purchasing.

    • haggis for the soul says:

      It really depends on the kind of clearance you need. The majority of government workers don’t need a secret or above security clearance.

      Even if you get a government travel card, they give you the option of not allowing a credit check. This results in your getting about half the charge limit as someone who allows a check, but they won’t deny you a card because of it. I’m not aware of any kind of credit check for purchase card holders, at least not yet.

  2. Destron says:

    Well, I can see doing a credit check on someone if you are going to give them control of your companies money and assets – i mean, if they can’t handle their own money, how can you trust them with yours? Likewise, I think it puts someone more in a position to want to steal if they are in major debt and get desperate.

    • TimothyT says:

      This whole credit check thing is really gotten out of hand. In this seemingly endless bad economy there are a lot of good people who have or are at risk of getting credit dings because of the awful job market and layoffs. Unless there are habitual loan defaults while employed and spanning for years, this hardly seems fair. And no, I have excellent credit!

    • JMILLER says:

      Here would be the flip side of that. If you were willing to steal company funds to protect your personal finances why wouldn’t you have done it before that point. The person willing to misappropriate company funds could be using them to avoid the credit problems.
      I would also point out that a large number of credit reports have errors on them. When I was 22 I was offered a job pending a background/credit check. Turns out 10 years before ( I would have been 12) I was sued and lost and never paid the judgement. The HR director said with that on the report they could not hire me. By the time I had it straightened out the position was filled. It was actually a judgement against my father (we have the same name other than the JR at the end).

    • ARP says:

      “If they can’t handle their own money, how can you trust them with yours”

      What about a medical bankruptcy? What about the housing crash? What about job loss (i.e. how can you pay your bills if you don’t have a job, but how can you get a job if don’t have a job.”

      However, I do think that if a person has a poor credit history spanning a long period (e.g. 5+ years) and they’re handling lots of cash, that would be an acceptable basis. Of course how do they know about this unless they do a check? Its one giant paradox.

      • stock2mal says:

        I have good credit (just to establish this beforehand) and I don’t see how an individual’s choices directly affect the choices they make in regard to a business that is separate from them. How often do you see fat or obese dietitians? Just because they can’t apply something to themselves personally doesn’t mean they fail when it comes to other things.

        • rugman11 says:

          I think the idea is that people who are in financial trouble (say a couple months behind on their mortgage or in large amounts of debt) are more susceptible to embezzlement or taking kickbacks. I’m not saying it’s perfect logic, but that’s the theory behind the practice anyway.

          • kmw2 says:

            And there’s absolutely no evidence to support that, by the way. It’s one of them “common sense” things that really makes no sense at all.

        • Not Given says:

          Are we sure fat dietitians didn’t get that way by following their own advice? All that low fat crap did was make me gain 100 lbs. Started eating fat, meat, cheese, butter, cream and eggs again and dropping the brown rice, potatoes, whole wheat pasta and bread the dietitians seem so enamored of and it just falls off.

      • Leksi Wit says:

        “What about a medical bankruptcy? What about the housing crash? What about job loss (i.e. how can you pay your bills if you don’t have a job, but how can you get a job if don’t have a job.”

        If you can explain the bad credit with “I had cancer, I’m a survivor” then I am certain an employer will give you leeway.

        However, the housing crash and job loss? That just shows you were irresponsible. I bought a house I could afford back when the bubble was growing, with 6 months savings, and when times were good I paid down almost all my bills. If I hadn’t done all that I’d be in a lot of financial trouble right now.

        The only excuse for horrible credit that I can see an employer (or myself) forgiving is medical — either you personally or a household dependent/spouse. Otherwise, you’re an irresponsible person, and that reflects upon you, making you look like a poor candidate for a high-responsibility job.

        • ARP says:

          Do you think the HR department is going to let you explain that? Many won’t.

          So what you’re saying is that the people who probably need jobs the most, probably don’t deserve them because they’re all irresponsible for not saving 18 months of income. I’m sure it’s easy for someone making 9$/hr and living hand to mouth can save 18 months of income, no problem.

          So, if you’re rich, then you deserve a job, if you’re not, you don’t. That won’t cause any wealth disparity.

          • Leksi Wit says:

            “So what you’re saying is that the people who probably need jobs the most, probably don’t deserve them because they’re all irresponsible for not saving 18 months of income. I’m sure it’s easy for someone making 9$/hr and living hand to mouth can save 18 months of income, no problem.”

            18 months? Huh. Who can save up that much besides the rich! Well, I’m not rich and I do just fine by being a responsible consumer.

            I have 2 friends who both earn more than me and they both filed for bankruptcy due to overspending. Mind-boggling, actually, how people can be so smart and yet so stupid.

            If you’re earning $9/hr then that is not the type of job (most likely, though I’m certain some exceptions exist) that will care about your credit score enough to preclude you from employment. And the explanation can come in the form of something you tell your potential employer pre-background check on the disclosure form (which are common). Typically the jobs that do that kind of check are in the mid-high income range.

            When John or Jane Dough apply to Target for their $9/hr jobs, their credit really won’t matter. So, no the credit check is not some sort of elitist tool that is going to increase the wealth gap. Lawl.

            • gdrift says:

              “When John or Jane Dough apply to Target for their $9/hr jobs, their credit really won’t matter”

              What are you basing this on? A study you found that shows which jobs do credit checks? Or are you just making it up? I was once turned down for a job at a convenience score becuase of my credit rating. They didn’t give me a chance to explain, either. Just “Too bad, poor credit we won’t hire you.” This goes against what you’re saying is reality.

        • Destron says:

          Most of the people that lost their houses in the housing crash were irresponsible to begin with. They should have never bought those houses because they could not afford them and banks extended the loans to them anyway. If buying a house puts you so close on the edge that losing your job temporarily will put you on the street – then buying that house is probably not a good idea – and that goes for ANY major purchase. Life is unpredictable and a major bitch sometimes so you should always think the worst. Medical bills are a toss up, because a good 30% of them are also caused by people being irresponsible and going to the emergency room for shit they could have went to a doctor for but didn’t because they don’t have insurance. Lost your job? Work can be found somewhere – people just need to get off their high horse and do a job they think they are to good for and make some money. I don’t give a fuck how many degrees you have, you can still go make some Big Macs for a while if you need some money.

        • dolemite says:

          Honestly, that sounds easy. “Just explain it away, they will be fine.”

          Let’s say you have 3 candidates for a job. They are all 100% equally qualified. The employer goes to credit score. A has a 750, B has a 700, C has a 550. But C calls up the employer and says “I was going through a few things…I had cancer, etc.”

          Really…what is their motivation to go for C? Sickly, may get cancer again…bad debt, or the other 2 people that have no problems?

    • MrEvil says:

      I’m sure Bernie Madoff’s credit report was just full of all sorts of charge-offs and delinquent accounts. [/sarcasm]

      • dolemite says:

        Good point. A lot of the people doing the shiftiest things with money right now and in the past have masters degrees and doctorates and work at the top of corporations and on Wall Street. These same people caused millions of people to lose their jobs and lose trillions in wealth. But just let Joe Mainstreet miss a few payments because his daughter was sick…he doesn’t deserve to even have a job in our society. Nevermind he wouldn’t even be out of work if not for these same people that are telling their offspring companies to not give him a job because of his credit score.

        • dolemite says:

          Oh, and the real KICKER is…a lot of those bozos would be out on the street looking for jobs too, except Joe Mainstreet’s tax dollars bailed them out. It’s like a triple shiv in the back.

      • Doubts42 says:

        So because it wouldn’t catch every crook we should throw the tool away?

  3. Blueberry Scone says:

    Oh, my fair state! We try so hard, but it just never seems to work.

    I understand why businesses want to run credit checks, but it can really prohibit someone who is looking for a job – any job – to turn their financial situation around.

  4. Geekybiker says:

    What is funny is now with lots of people doing strategic defaults, a person with a poor credit score may actually be better with money than someone with a better score.

    • winnabago says:

      A strategic default is typically the result of one very bad real estate decision – and this isn’t something that should be discounted on a credit report. Most mentions of strategic defaults gloss over what they really are – poor investments of someone else’s money. I would consider not hiring someone for a financial oversight position because of it.

      • chargernj says:

        That never seems to be a problem for people like Donald Trump. Their history of strategic bankruptcy is seen as a sign of business acumen

      • Geekybiker says:

        Not really. Most strategic defaulters are in these positions through no fault of their own. The housing market in general has just collapsed. The strategic defaulters typically are higher income, high credit rating people. What makes them different is that they are smart enough to drop a bad investment when they see it. Even if you take the position that we all should have seen this coming, the strategic defaulters look better for someone handling your money. After all they aren’t the ones throwing good money after bad once they know the investment has gone sour.

    • rpm773 says:

      Oh, I think that’s highly debatable.

      But it does raise an interesting angle to the strategic default debate. It sounds like someone who’s made a cold, calculated decision to strategically default as a way to stick it to the bank who stuck it to him would do well working for a bank. Or a lending company. Or somewhere he can make cold, calculated moves against gullible borrowers.

  5. dolemite says:

    Good. The federal government needs to ban this. Just because someone is having medical problems, or went through a divorce, death in the family etc. shouldn’t preclude them from finding employment. Honestly, do we need another endless loop like: “if you don’t have experience, we can’t hire you.” “How can I get experience if no one will hire me?” Now: “If you have bad debt, we can’t hire you.” “How can I pay off my bad debt if no one will hire me?”

    • TimothyT says:

      I totally agree. Also, one of the problems is that it has become a policy in many companies, meaning that they are eliminated from the candidate’s lists immediately if they have bad credit. That makes no sense. The hiring manager can’t even discuss it with the person because “policy” dictates he cannot be hired. What a freaking mess.

      • dolemite says:

        Yeah, my wife is kind of facing this. Messy divorce a few years ago, and her credit was *shot*. No fault of hers…her ex just had tons of debt, and her name was on everything too. So she is working with lawyers, credit companies etc to get it all fixed, but it literally takes years. So in the meantime she has graduated college and is looking for jobs. Highly skilled, educated etc…but a poor credit score is holding her back? Stupid.

  6. NarcolepticGirl says:

    A lot of people are in debt right now because they have been out of work.
    There credit may be screwed from medical bills, family emergencies, etc.

    Some people can’t manage their own money – but are excellent at managing others. Like my sister.

    If you’re qualified for the position and the only thing holding them back from hiring you is your credit – they should at least talk to you about it and see if you have a ‘valid’ excuse such as one of the ones listed above.

    • Bakergirl says:

      Agreed. I had a great credit score that’s gone south due to medical bills (I’m glad I’m in a stable job), and although I have proved myself repeatedly at past employers, I would probabaly be on the screwed side today.

    • ScarletsWalk says:

      I’m a freaking mess in my own personal life, but I am a stellar employee with a very low error rate and a high degree of professionalism. While there might not be a lot of us, there are some of us. It makes finding a job in a bad economy even harder, which in turn makes it more difficult to clear up messes in our personal lives.

  7. JMILLER says:

    I would suggest that when the employer asks to run your credit, you run a credit report on the employer. If you see any past lawsuits, or pending lawsuits, when they ask you about your credit, turn the tables and say, why don;t you tell me about this slow pay you have with your supplier ABC company, or why is Jane Doe suing the company due to sexual harassment. If they are basing their decisions on your private information, I suggest they share all their private details of their lives. I’d love an interview with HP with this right now.

  8. MacBenah says:

    This is absolutely ASININE. It’s an employer’s right to hire who he wants to, based on his criteria. Although the gov’t would properly swat down anyone discriminating on unconstitutional bases (race, religion…), they have no business telling anyone they have to hire someone who demonstrates unreliability, stupidity, or potential dishonesty.

    • the Persistent Sound of Sensationalism says:

      That would only be worth it if you knew your credit was going to prevent your from getting a job offer anyway. It would indeed be a satisfying feeling, but I guarantee you would never get an offer if you did it. It’s along the same lines as not learning how to gracefully decline answering illegal interview questions.

    • ARP says:

      So getting in a car accident proves your stupid or unreliable? Does marrying someone who gets cancer 10 years later mean your stupid or unreliable? Being a victim of crime mean you’re unreliable? Does losing your job mean you’re stupid or unreliable?

      These are all reasons your credit score might suck and are difficult to save for (in in this economy, its even hard to save for unemployment now as it can be more than a year). Tell me which one of these proves your stupidity or unreliability?

      • dolemite says:

        Everyone assumes poor credit is due to someone being an idiot with money. Studies show the majority of bankruptcy/credit problems are from medical problems, even if the people had insurance.

    • Guppy06 says:

      Polygraphs for everyone!

  9. Nigerian prince looking for business partner says:

    I’ve had several credit checks for jobs and security clearances. It’s been my experience that if you’re a good candidate and are open about problem areas prior to running the check, then there really isn’t anything to worry about.

    Pretty much any employment questionnaire could theoretically be abused. If someone has bad references, maybe he suffered from undiagnosed depression or diabetes, and was a poor performer because of it. If someone is a two time college drop out, maybe it’s because his wife was diagnosed with cancer and he had to drop out to take care of her and that’s why he has a 2.5 GPA. If somebody had a DUI at some point, maybe it’s because his wife died, and he made the bad decision of getting really drunk and driving home. If a man was dishonorably discharged from the Army, maybe it’s because he was suffering from PTSD and completely snapped and punched his First Sergeant.

    Just because these hypothetical scenarios can occur, it doesn’t mean employers shouldn’t be able to ask about employment history, education, criminal record, or military service. For large employers, there just needs to be openness about how these various factors apply to ranking, as well as a system in place to appeal or explain potentially negative information.

  10. balthisar says:

    Oh, c’mon. It’s not like reputable companies are going to look at your credit report, see 650 there, and then tell you that they can’t hire. There are a lot of considerations when hiring someone with fiduciary responsibilities in a company. It’s not just “does he have a lot of debt?” It’s how you manage your debt and your credit. If you have a single write-off that four years old, it’ll probably be ignored. If you have a $450,000 mortgage, that’s probably going to be okay. If you have $300,000 in unsecured signature loans with the Bellagio, then of course it makes sense for a company to raise an eyebrow.

    • dolemite says:

      It’s more likely to be a cascade of small debts showing up than an instance like that. “Hmm, had to pay for my doctor’s visit and medicine so I could continue living, but that caused my car payment to bounce, then my credit card, then student loan, then I got hit with $230 worth of fees from my bank, so I can’t make my student loan payment this month…then they end up with like 20 things showing up on the credit report, even though it’s only $1000 worth of items.

    • Geekybiker says:

      Its more likely that you’ll just not get the job and you’ll never know why.

  11. brinks says:

    We were looking to fill an Assistant Manager position at a place I used to work at and we lost three seemingly good candidates because of their credit report. Giving someone access to the store’s cash registers, safe, and bank deposits requires honesty, but I’m not sure how it really correlates with your credit score, unless you have long-term troubles and a ton of stuff in collections.

    One of the candidates that was turned down was a former co-worker who I have an excellent reference for. Supposedly, her credit was messed up because of her husband. He had stuff in collections, but it was all intermingled with her stuff on the report, and she lost out on the job because of that. THAT’S the kind of situation I’d like to see these laws protect us from.

  12. BigDave says:

    Huh, I always thought credit checks weren’t so much about “You defaulted on Mastercard? NO JOB FOR YOU!”, as much as it was about verification of who the applicant is who they say are. For instance, if I have claimed to have lived in Pittsburgh my entire life, but a employer pulls a credit report and sees a Capital One card going to a address in Tampa Bay, that’s going to raise a red flag or two.

    • SlappyFrog says:

      A pure background check should show residency history, there’s no need to pull a credit report for that.

  13. SlappyFrog says:

    “Some experts claim that there’s no connection between poor credit history and poor job performance.”

    How about the credit agencies PROVING that there is a connection instead?!?!?!

  14. Arcaeris says:

    Every State of California employee, along with most others in this state, gets a credit check now – and it has nothing to do with job description.

  15. XTREME TOW says:

    Large Print on Employment Form: “All Potential Employees are subject to Credit Checks.”
    Fine Print: “Check here ___ if you would like a copy of any reports we receive.”
    Ditto for Criminal/Background Checks and Drug Tests. Read the Fine Print.

  16. unchainedmuse says:

    When I was living in Connecticut, I once wrote my Congressman about this issue, asking him to consider working on legislation limiting pre-employment credit checks. The economy is bad, and responsible people are out of work. He refused, and completely lost my support.

  17. common_sense84 says:

    “In other words, pretty much the same circumstances under which a company would bother to get a prospective employee’s credit report. But it’s the thought that counts, Illinois.”

    Another top reporting job by the consumerist. The issue was not financial related jobs checking credit reports. The issue was every company was starting to check credit reports for every position. That is what the bill is meant to prevent. If the job does not involve access to money, there is no reason to check a credit report. This law means most companies cannot check credit reports for positions any more. It’s an important law.

    • The Lone Gunman says:

      I wouldn’t bet on that. The way that this appears to have been written, there’s enough vagueness for interpretation that an employer can argue that they have not violated the prohibitions.

  18. The Lone Gunman says:

    Is Zombie Credit still a problem for a lot of folks? Illegally re-aged debt?

    Seems that would be a potential job-offer-killer–and it shouldn’t be.

  19. yankinwaoz says:

    To those who state “Just explain the circumstances and they will ignore the negative item”. You don’t get it.

    HR, like IT, Customer Service, etc, has been outsourced and dumbed down in corporate America. They view it as an expense, to be reduced to the lowest possible cost, no matter the long term or wider consequences. HR doesn’t bring in revenue. Thus, it must be cut to the bone.

    They have outsourced screening to India based HR companies who compute “scores” for potential employees. The idea is that if they can automate the elimination of anyone who will not get hired, then that saves them money. They don’t care that you credit was damaged through no fault of your own, or because it is just plain wrong. No human is going to bother to look at it because that costs money.

    And because of the recession and the larger pool of applicants, they feel that they can get away with it because they have a large enough pool that statistically they will find someone who meets their absurd requirements (someone with perfect credit who is willing to work for crap wages and no benefits).

    It is the exact same stupidity that prevents banks from giving loans to the most reliable people in the US, those who have NO debt and never wanted a car loan or a credit card. They have decided that a computer can do a better job.

    Bottom line: It is just US corporations being short sighted and stupid as usual.

  20. chiieddy says:

    Massachusetts passed a bill eliminating CORI checks last week.

  21. H3ion says:

    From the Land of Lincoln to the Land of Blagojevich. Waiting to see that sign as I enter the state.

  22. Miz_Ivy says:

    It’s one thing to do a criminal background check, but my finances are none of my (potential) employer’s business. If a credit check is required to apply, I’ll apply elsewhere.

  23. Carlee says:

    Not all government jobs require credit checks – not sure about federal or state, but our county doesn’t. They do scan fingerprints before hiring, but no credit checks. Even for people in accounting positions (though it might be different if you were a manager).

    At our state university, there are no universal credit checks for applicants either. For those in high, financial positions, they do have to disclose their financial details (like a politician would), and some departments can choose to fingerprint their new hires (and have background checks), but it is not a requirement. I didn’t have any sort of background or credit check done before I was hired. I have a corporate credit card and our personal credit has nothing to do with it.

  24. golddog says:

    I’m an employer. Relatively small. I run fingerprints through FBI and the state, and a separate very specific criminal database filter. Positions involve trust but not with money. I do not do pre-employment credit checks, but I have thought about doing it for final candidates along with other personality inventories.

    What I think would be useful with credit checks is not so much a FICO score but behavior patterns. Does the person move every four months? Does their resume match their credit history’s employment section? Do they habitually default on their financial obligations? Do they have garnishments or public judgments that they’re trying to stay a step ahead of and end up quitting in six months once the courts find them and start taking half their paycheck?

    I’m not looking to filter anyone out unfairly – if I see a FICO of 500 after a bankruptcy and a big default to a hospital I can put 2 and 2 together, but I *am* looking for someone who isn’t going to flake out on me after I invest alot of resources training them. Right now I rely on the FBI, intuition and an advanced psychology degree but I’d say 1 out of every 10 are borderline sociopaths who interview really well but turn out to be nightmares six months in.

    • golddog says:

      I should add that, systemically I think that most large employers are not putting the thought that I am in to credit checks as a tool for better hiring decisions. I think for companies large enough to actually have a full on HR dept, it’s mostly about efficiently filtering out candidates on the sole assumption that high FICO = good candidate, and in that sense, probably better to restrict the practice’s use.