Job Applicant, What is Your Credit Score?

28Jun10

No longer are credit scores used to determine if a person qualifies for a home or auto loan.  Now, employers are beginning to run credit on prospective job applicants.  How does one’s credit score affect job performance you wonder? 

The current job market is very competitive, which allows employers to use credit scores as another tool in their selection process.  Many employers believe those who have a high credit score may be more responsible.  Additionally, job applicants who owe a significant amount may be viewed as more likely to steal.  Thus, a job candidate with a high credit score is likely to be chosen over others whose scores are low.   

Sixty percent of employers recently surveyed by the Society for Human Resources Management said they run credit checks on at least some job applicants, compared with 42 percent in a somewhat similar survey in 2006.

So, if you are having a difficult time landing a job, you may want to pull your credit report from one (or all) of the credit bureaus.  By law, you are entitled to get a free credit report from each of the three credit bureaus every year.    Although you will not see your credit score, the report offers valuable information as to the health of your credit. 

Do you feel it is fair for employers to run credit on prospective job applicants?  Why or why not?

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8 Responses to “Job Applicant, What is Your Credit Score?”

  1. 1 missdisplaced

    Personally, I feel it is an invasion of privacy to run credit checks on prospective employees UNLESS the job includes work in accounting, banking, public service, or some other financial services industry where the applicant would be directly dealing with large amounts of money and/or managing money. I applied for a job at Target the other week and they wanted my SS number. Why? I was applying for stock clerk or cashier. I didn’t even have the job, it was just an online form. That is way too invasive and uncalled for.

    • Thank you for your valuable response! From a job applicant’s perspective, I can understand how it appears to be intrusive to use credit scores as part of the screening process especially when the postion is not related to cash-handling or other finance activities. Although employers do not see account numbers or credit scores, they are able to see derogatory activity. In fact, many applicants who used to have great credit may have fallen victim to lay-offs, bankruptcies, home foreclosures, etc. This makes it difficult for people to land a decent job to get themselves out of debt and back on track.

      In regards to an online job application that request for SSN, your concern is valid as well. “Contrary to popular belief, the possession of a Social Security number is not a prerequisite for working in the United States. Immigration laws provide for a variety of documents that an employee can present to demonstrate identification and eligibility to work in the United States…An employer can ask for an applicant’s Social Security number if it has a legitimate reason to know such information, such as to conduct a background check consistent with the form and scope of such inquiries under the Fair Credit Reporting Act.” Thus, it is likely that Target uses credit reporting in their selection process.

      By the way, good luck with your job search!

      Source: http://www.entrepreneur.com/humanresources/employmentlaw/article61398.html

  2. 3 missdisplaced

    I can understand asking for it AFTER they have chosen you and want to do the bonding/background or verification check to complete your terms of hiring. I just though that to ask up front, and on the internet yet, was very invasive and potentially a risk of identity theft. I don’t like giving out that information unless hired or near being hired.

    You have a good point. Many unemployed people do fall behind and could have black marks on their credit history. It is quite discriminatory in my book to not hire because of it. Having a few marks or low score does not make one a thief or poor risk. I highly doubt if those Wall Street bankers and hedge fund managers are put to such a test! And look what they did to the economy.

    • I agree. It makes more sense to request confidential information such as SSN after the initial application submission. With identity fraud on the rise, I believe most of us are more concerned with ANYone accessing our personal information. Nonetheless, employers also have the right to pull credit once a person is employed. “The FCRA allows employment checks not only for hiring purposes but for other employment purposes such as promotion, retention, or transfer. Credit checks for the purposes of retaining you as an employee allows the employer to check you credit periodically. Once you have given your permission, you generally need not be asked again.” With an employer’s right to run credit for the purpose of screening and retaining employees, it is even more important for prospective job applicants and existing employees to ensure no incorrect information reflects on their credit reports.

      Unfortunately, with state of the economy, it has given employers the ability to be highly selective with regards to hiring. Hopefully, employers are not using credit reports to throw out all applicants with even the slightest bit of negative activity. On the other hand, I can also understand from an employer’s perspective, the use of credit report can provide other pertinent information such as verifying previous addresses, job employements and identity.

      If you were responsible for hiring a candidate, what criteria would you use to determine if he or she would be a good fit for your organization?

      Source: http://www.privacyrights.org/fs/fs16-bck.htm

  3. The most important thing I’ve come to find is that the success of your business is directly linked to quality employees, and thus finding the right people to hire and represent you company is critical.

    In this economy, you can’t take chances with who you hire, which is why all businesses should conduct background checks and pre-employment screening. It’s the least you can do to protect yourself (and other employees) from drug users, criminals, and frauds.

    However, when it comes to checking credit reports, people have different opinions. In fact, some states are trying to pass legislation to limit the employers ability to run these checks.

    For more detailed information about credit reporting legislation when it comes to pre-employment screening, check out this blog at:

    http://hire4integrity.premieress.com/

    • Nice response! From an employer perspective, being able to consistently hire top candidates is important in ensuring the highest level of productivity for the company. Furthermore, an employer must provide a safe work environment for employees. Credit checks are an additional tool for employers to further evaluate the quality of its applicants.

      As we know, some feel credit checks can be invasive and/or disciminatory. The reasons may vary from concern with providing confidential information to unfairness for those who have recently dealt with unfortunate circumstances (i.e. medical issues, foreclosures, bankruptcies, etc.) or who feel they are being “targeted.” In addition, uneuqal burden seems to be placed on those seeking lower skilled jobs. Thus, the view of credit checks being discriminatory.

      What might be a good balance between employer and employee/job applicant perspectives so that it creates a win-win situation?

      • New legislation is pending in many states that would limit the use of credit reports in determining an applicants eligibility for employment.

        Legislatures around the country are trying to make sure that the hiring process is fair and undiscriminatory, and are thus proposing that credit checks not be performed unless they are deemed “necessary” for the job position. That means that an employer wouldn’t be able to use what’s found in a credit report against you unless you’re in a position of financial trust and power (like being a broker). In other words, lower skilled jobs won’t be able to require a clean credit check–and won’t be able to run it even if they wanted to.

        A great article that goes more into detail about this can be found at:

        http://hire4integrity.premieress.com/blog-0/bid/37068/Is-A-Personal-Credit-Report-Relevant-to-A-Background-Check

      • A new legislation to ensure the hiring process is “fair and undiscriminatory” will allow some job applicants a better chance at getting hired. Nonetheless, job applicants (anyone for that matter) should keep an eye on their credit and try to avoid any negative activities that could cause their score to drop.

        In addition, job applicants should ensure their resumes are free of error and are prepared when they interview. Here’s some information about regarding preparing for an interview:

        https://lbwong.wordpress.com/2010/06/29/interviewers-best-behavior/


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