Monica Cotallat, Hudson Community College
Professor Sakina Laksimi-Morrow
March 17, 2013
BAD CREDIT CAN HURT JOB SEEKERS
I am a student majoring in Graphic/Web Design. This is my 4th semester at Hudson Community College.
A large number of employers use credit checks to make employee selections. A study made by the Society for Human Resource Management (SHRM) in 2010 reported that 47 percent of respondents only use credit background checks for job applicants in certain types of positions, for example, positions with fiduciary and financial responsibilities (SHRM, 2010). Thirteen percent of those surveyed conducted credit checks on all candidates while 40 percent in the SHRM study reported that they did not utilize credit checks on any job candidates (SHRM, 2010). Almost half of employers are running credit checks. What are they looking for? Is it an invasion of privacy? Is it fair? What can be done about? Are people with a blemished financial past scarred for life? The purpose of my paper is to understand why this is happening, examine its reasons and what one can do to help themselves in a competitive work force. There is an array of tools employers use to examine and decide on job applicants and employee job promotions. Typically they will contact references, verify educational and/or professional history, request a criminal history report and in certain situations obtain an individual’s credit history. For some this can create a barrier in the search for employment. A study made by the Society for Human Resource Management (SHRM) in 2010 reported that 47 percent of respondents only use credit background checks for job applicants in certain types of positions, for example, positions with fiduciary and financial responsibilities (SHRM, 2010). Thirteen percent of those surveyed conducted credit checks on all candidates while 40 percent in the SHRM study reported that they did not utilize credit checks on any job candidates (SHRM, 2010). This showing almost half of employers are using credit checks on job applicants which economic downturn has made it harder for some people to get a job due to bad credit. It’s a catch 22. You need a job to pay your debit down but because of your bad credit you can’t land a job. There is also the question of invasion of privacy. Many job applicants have concerns with employers asking questions or requesting an explanation on why they are behind on their bills. Whether tarnished credit is due to medical bills or a messy divorce is it really necessary to explain personal matters to an employer? Is this a violation of rights? From my readings it appears NOT to being a violation. Under the Fair Credit Reporting Act (FCRA), employers are allowed to obtain and use employee’s credit report. However there are guidelines for requesting this information. An employer must inform the applicant about checking into their background and the applicant must sign giving permission to the employer to access the credit/background check. One has the right to refuse such a background check but most likely a spot for candidacy will go out the window. Employers use it as a measure of character. Poor credit history may cause a potential boss to question your dependability, decision making skills, constancy and follow through abilities. Also presumably this helps employers prevent theft or embezzlement for fear of lawsuits. However, there is no concrete evidence connecting people’s credit histories to their on the job performance or productivity. In 2010, Eric Rosenberg, director of state government relations for Trans Union, one of the country’s largest reporting companies told Oregon legislators “At this point we don’t have any research to show any statistical correlation between what’s in somebody’s credit report and their job performance or their likelihood to commit fraud.” Oregon since then is one of 7 states who had passed a bill prohibiting/limiting the use of credit...