More Employers Using Credit Checks On Job Applicants

Written By Jodi Brooks

DENVER (CBS4) – It’s a recession side effect. People can’t pay their bills because they don’t have a job. And now they can’t get a job because they can’t pay their bills.

An increasing number of employers are using credit checks to screen potential job applicants. It’s totally legal, and bad credit is not illegal, but employers say the information is helpful in the hiring process.

Timing couldn’t be worse. It’s hard enough to find a job in this economy, and now this extra hurdle makes it that more difficult for job seekers.

“I’m actually pretty against it,” said job seeker Rick Fernandez.

“I would rather they judge me on how well I can do the job, ” said Tom Herrmann, also a job seeker.

One woman was so afraid to share her name with CBS4 because she’s afraid her bad credit history will hurt her chances of getting a job she desperately needs.

“Background check, I have no problem with. Drug test, I have no problem with, but when it comes to the credit, that’s somebody’s personal business,” she said.

The woman was laid off a year ago. She asked, “What bearing does (my credit) have on me doing the job?”

Often employers use credit history to gauge a level of responsibility. Whether it’s a valid assumption or not, some employers believe if people are not reliable in paying bills, then they will not be a reliable employee.

“It’s really unfair,” said Andrew Hudson of Andrew Hudson’s Jobs List, Inc.

Hudson helps people find jobs through his jobs list website.

“Make sure that your relevant skills, your talent, your background, your experiences, your accomplishments, all of those things are spelled out very clearly to show that your credit score might not have any relevance whatsoever to the job,” he said.

Hudson admits credit checks are relevant for some jobs. The woman who didn’t share her name wants an accounts payable job. She has 30 years of experience.

“I’m not handling money, I’m not handling any of the finances, any cash per se,” she said.

There is pending legislation at the state Capitol that greatly limits employer’s use of consumer credit information. But for now the bottom line — those who end up getting an interview should fess up.

“You have to be upfront and let folks know what occurred,” Hudson said.

It’s not easy when a credit check stands in the way of the next paycheck.

There are three major credit reporting agencies, Experian (www.experian.com)0, TransUnion (www.transunion.com) and Equifax (www.equifax.com). They all provide modified versions of credit reports in what’s known as an “employment report.”

An “employment report” has information about credit-payment history and other credit habits. It does not include a credit score or date of birth. It also does not place an “inquiry” on a credit file. Too many “inquiries” tends to lower a credit score.

Also know one’s rights. An employee needs permission to run a credit check, and an employer is supposed say if credit information is used against a potential employee. Also, under federal law a bankruptcy cannot be used against a person.

– Written by Jodi Brooks

Comments

One Comment

  1. Kyle & Sylvia Greene says:

    Credit checks are just a way to justify sending our jobs overseas and preventing the over 50 set from getting jobs. And while it may not be illegal, it should be. The article says a credit check is a way to judge a person’s responsibility. Yeah, right. My wife developed a brain lesion, was hospitalized, her employer fired her and she lost her insurance. We were forced into bankruptcy and then I lost my job and every application ask to do a credit check and even though federal law prevents using the Bankruptcy against us, you know they do– why else would they gather the info if they didn’t plan to use it? I may never work again and not for any lack of responsibility on my part.
    If the Government were really serious about getting people back to work, background checks of this sort would be banned.

    1. Margy says:

      I am sorry for your wife. Why should the employer fire her for a medical condition? No more good employers out there; profit over caring…
      Hope there is somebody out there who will hire you. Soon.

    2. Sandy says:

      I feel your pain. I am in a similar situation. It is like a vicious cycle. I feel like this violates someone’s privacy. They have proven that having bad credit does not affect someone’s ability to do a job or increase the risk of theft. Many people fall into hard times due to situations out of their control and then they are penalized for it. Our laws are a mess. I read that because of the recession some 25% of people are suffering from poor credit if these people lose their current jobs what then happens to our unemployment rate? Unbelievable really. I wish you the best of luck in your search. I have been searching for months so far no luck and I have a Master’s degree that is basically useless now, so to pay my student loans will be near impossible yet more marks against my credit.

  2. Margy says:

    This is nothing new, at least for me. Every job I’ve applied for conducted full background checks. I’ve worked for both the public and private sectors. I guess now more than ever with so many people competing for the same position and having the requisite plus more skills, it’s a way out for the employers to say “I choose…” and the person with a stellar credit history lands the position.

  3. Laura says:

    I hope the people in HR whose decision it is to deny someone a job (based on info that is none of their damn business in the first place) never experience financial hardship. Their credit better be perfect too and remain that way or else they should be fired also! Anyone who denies someone the ability to make a living just because they’re having hard times deserves to find themselves in the street one of these days begging for change.

  4. Mike says:

    Im sorry but this is a small problem in my eyes people. Try finding a job when you have a criminal record. Yes it’s wrong to judge somebody based upon how they spent their money in the past, or in better terms their credit history; but that history can be erased or improved over time. This country has a problem that has been continued to recognize very little attention, that problem is criminal reform. I am a ex-convict myself. I’m also going to school for my bachlors degree in business management. Everybody makes mistakes, most learn their lesson, so why is it next to impossible for a ex felon to land a decent job to feed him/herself and their familys? Since, the mid 80’s most people who get convictions are often forced right back into crime because people won’t give them a chance. I was young when I got my first convictions, unfortunatly I was still a “legal” adult at that time. I’ve had more doors shut on my face then the stars in the sky. So yeah, pay your bills and if you cant, then arrange something with your debtors. If that doesnt buy you time then file bankruptcy. Until then, focus on something that won’t really stop you from finding work in the next 6 months.

  5. Bobby says:

    I’m also attending college to finish my degree in Hospitality Management. I have old DUI’s and a bankruptcy. I want to work in HR Mike because people that do change their lives around have integrity. It shows strength. We’re human, life happens, but how recover from our mistakes is what counts. Good luck to us both.

  6. DenverVet says:

    Excellent comment Bobby. Good luck to you in finding a rewarding job and hang in there, no means “yes” is what I always went by. Credit is a private matter and they should leave it as that.

  7. WhatsYourCredit says:

    Credit checks are 100% justifiable. If one was truly responsible, they would have saved for a rainy day (or year as the case may be). If people didn’t live the last 10 years on an ecstasy induced spending spree and saved a little more for tomorrow, they could get by during a period of extended unemployment. If the savings run down, do what you have to do to pay the bills, even if it requires you to work at McDonalds, or do something to make ends meet instead of sitting around waiting for the perfect job. Credit checks not only show how you manage your bills, but also how you manage your unemployment.

    1. LAUREN says:

      HEY, HERE IS SOMEONE WHO ISN’T LIVING PAYCHECK TO PAYCHECK. 4 YEARS AGO I HAD TO TAKE A $1000 A MONTH CUT IN PAY TO GET A JOB. SO NOW I’M MAKING WHAT I WAS 15 YEARS AGO. SAVE A LITTLE FOR TOMORROW? IF YOU ARE JUST KEEPING THE WOLF FROM THE DOOR, THAT’S NOT AN ANSWER. EVERY TIME YOU OPEN THE PAPER, RTD, EXCEL OR WHOEVER IS RAISING THEIR RATES TO COVER THEIR EXPENSES. HOW MANY OVERPAID MANAGERS CAN WE SUPPORT? YOU ALSO STATE “DO SOMETHING TO MAKE ENDS MEET”–LIKE WHAT, ROB A LIQUOR STORE? YOU ARE OUT OF TOUCH WITH REALITY.

      1. WhatsYourCredit says:

        I too am working through harder times. I don’t claim to know anyone else’s life challenges; however, I have witnessed a lot of self indulgence and over-spending over the last 10 years. Some only look back a couple years and complain about how life has gotten harder, and I know it has since 2006, but what about the years before that when those same people were buying houses they couldn’t afford, brand new TV’s, and cars that were more of a luxury than a mode of transportation? During those same times, there were people like me driving by those expensive houses and picking up the old TV’s off the curb because $2,000 for a new one seemed unreasonable when there were free options…. and yes, I am living paycheck to paycheck for the most part. The other $10 a paycheck goes to savings and not to the newest smart-phone store. Robbing a liquor store seems to be a bit farfetched for reality…

    2. Sandy says:

      You are making generalizations that simply are not valid. Not everyone spends beyond their means or has the ability to “save for a rainy day”. People can only survive during a long term of unemployment. They are not justifiable and you are part of the problem.

  8. Stasi says:

    Dear Ananymous, It is very upstanding of you to criticize people for the way they handled things that might have been completely out of their control. Many people I have met with bad credit have far better work ethics than those who have money to spare.

  9. Sue says:

    You say “An increasing number of employers are using credit checks to screen potential job applicants.” Who are these employers? You don’t name a single one. What makes you think they are increasing? There is nothing in your story backing up any of your claims, you don’t cite a single source who says credit checks are increasing. This is just poor journalism.

    1. Sandy says:

      How about McDonald’s for one. Bet you never though they would check, but they now check anyone applying for management. You name the company and I bet they check, it is not poor journalism. Do a bit of research on your own. Most employers now check credit.

  10. ACE says:

    I FEEL THIS IS JUST A SCAM TO WIDEN THE GAP BETWEEN THE “HAVES” AND “HAVE-NOTS”. IT IS QUITE APPARENT THE “HAVES” DICTATE THE RULES. OVER THE LAST 2 YEARS I HAVE HAD TO DROP PHONE SERVICE, INTERNET (USING COMPUTER AT WORK DURING LUNCH) AND CABLE TV IN ORDER TO TRY TO MAKE ENDS MEET. THIS IS AFTER OPEN HEART SURGERY AND LOSING A JOB. I HAVE TO WONDER HOW WELL THIS WOULD HAVE WORKED DURING THE “GREAT DEPRESSION”. NO ONE COULD HAVE GOTTEN A JOB. A CREDIT REPORT HAS ABSOLUTELY NOTHING TO DO WITH YOUR WORK ETHIC OR DRIVING SKILLS (TRY BUYING CAR INSURANCE).

  11. Daisy says:

    The credit score system was created by and for banks and financial institutions. It is their baby, their “gossip column” and should not be used by anyone else for anything other than the lending of money. Moreover, since it is theirs, they should be monitoring for mistakes and misinformation rather than advertising on TV that we should be doing this job for them. Ever had your insurance rate hiked up because of false info on your credit report? I have.

    Make it not only illegal, but punishable by incarceration to use anyone’s credit against them for jobs, insurance, etc. By the way, I am against the practice of using credit bureau info in hiring–in case I wasn’t clear….

  12. Karen says:

    Karen

    In general, I have not opposed the process of employers making an applicant’s credit report history as a “small part’ of their hiring decision, but with letting the applicant have a change to explain credit problems.

    HOWEVER, with the slow economy & thousands of layoffs over the past couple of years, the employers must not make a judgement/decision if the derogatory items only appeared after the applicant lost his/her job , but where all prior credit was good.

    There are thousands of people that have only had problems when recently out of work, but for years prior they had acceptable ratings.

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