It’s Time to Stop Employer Credit Checks

[ksen]

Op-Ed piece by Elizabeth Warren

http://time.com/money/4034052/stop-employer-credit-checks/?xid=soc_socialflow_twitter_money

Credit reporting companies that sell Americans’ personal data to potential employers have pushed the narrative that a credit history somehow provides insight into someone’s character. But, as even a representative from the TransUnion credit bureau admitted, they “don’t have any research to show any statistical correlation between what’s in somebody’s credit report and their job performance.” In fact, research has shown that an individual’s credit has little to no correlation with his or her ability to succeed in the workplace. Credit reports are not a way to screen out bad potential employees; they are just a way to discriminate against people who have fallen on hard times.

If credit reports were actually accurate they might be useful for lenders deciding if someone is a good enough credit risk for a particular loan.

But for screening job candidates? No. I don't think they have any business being used in filling job openings.

 

[Keith&Co.]

That would depend on the job, wouldn't it?

You can't be a credit union or bank employee if you bounce a lot of checks. Whether or not your inability to handle your own money reflects your ability to handle other people's money, the public's perception of the business will be impacted if some news program can sensationalize that 'X% of all Generic Credit Union's customer service programmers have a credit score of YYY or less!'

And those job positions that handle sensitive information, you don't want them too vulnerable. According to a Mossad agent's memoirs, something like 90% of all intel is received from workers who sex or money. Hiring someone who's in desperate need of cash to handle classified or proprietary information is just asking for trouble.

 

[ksen]

That would depend on the job, wouldn't it?

How did we staff these jobs before credit checks?

You can't be a credit union or bank employee if you bounce a lot of checks. Whether or not your inability to handle your own money reflects your ability to handle other people's money, the public's perception of the business will be impacted if some news program can sensationalize that 'X% of all Generic Credit Union's customer service programmers have a credit score of YYY or less!'

And those job positions that handle sensitive information, you don't want them too vulnerable. According to a Mossad agent's memoirs, something like 90% of all intel is received from workers who sex or money. Hiring someone who's in desperate need of cash to handle classified or proprietary information is just asking for trouble.

How does using inaccurate credit reports solve any of this?

 

[Keith&Co.]

How did we staff these jobs before credit checks?

Mostly by hiring the sons of the guy that had the job before him.

How does using inaccurate credit reports solve any of this?

Seems like your real problem is the accuracy of the credit checks, not the act of checking them. Maybe that'd be a better subject line, 'It's time to improve the accuracy of credit checks?'

 

[ksen]

Mostly by hiring the sons of the guy that had the job before him.

How does using inaccurate credit reports solve any of this?

Seems like your real problem is the accuracy of the credit checks, not the act of checking them. Maybe that'd be a better subject line, 'It's time to improve the accuracy of credit checks?'

No, my problem is that even if the credit reports are accurate they don't tell you how someone will perform at a particular job. If you check someone's credit who has a history of doing the job well but has dings on their credit report, if it's even accurate, you have no idea what may have happened in the person's life during those times. And someone may just be horrible at handling their own money but fantastic at handling other's.

Past job performance and reference checks would be much more reliable and accurate than relying on credit reports.

 

[dismal]

Why would selfish and greedy and ruthless employers pay for credit checks when they wanted to hire someone if they were of no value?

 

[Bronzeage]

Why would selfish and greedy and ruthless employers pay for credit checks when they wanted to hire someone if they were of no value?

Who said they were smart? I've known employers who gave job applicants polygraph tests and used handwriting analysis to help decide who to hire. Ouija boards are just as reliable.

The hiring process is the single most stressful and time consuming duty of a manager. An employer will grab at any straw that promises to make the job a little easier. The old saying, "It's who you know," is the Golden Rule. When it comes to hiring, a manager is desperate for any reason to favor one person over another, because there is seldom any significant difference in any of them, and usually not many from which to choose.

Credit checks are used for screening future employees because it is easy. Every person's report is laid out in the same format. When a manager is asked why he hired a person, he/she can point to a box on a form and say, "He had a high number."

 

[dismal]

Why would selfish and greedy and ruthless employers pay for credit checks when they wanted to hire someone if they were of no value?

Who said they were smart? I've known employers who gave job applicants polygraph tests and used handwriting analysis to help decide who to hire. Ouija boards are just as reliable.

The hiring process is the single most stressful and time consuming duty of a manager. An employer will grab at any straw that promises to make the job a little easier. The old saying, "It's who you know," is the Golden Rule. When it comes to hiring, a manager is desperate for any reason to favor one person over another, because there is seldom any significant difference in any of them, and usually not many from which to choose.

Credit checks are used for screening future employees because it is easy. Every person's report is laid out in the same format. When a manager is asked why he hired a person, he/she can point to a box on a form and say, "He had a high number."

So businesses who actually employ people *think* the credit checks add value and are wiling to pay for it but politicians know better?

 

[Nice Squirrel]

Who said they were smart? I've known employers who gave job applicants polygraph tests and used handwriting analysis to help decide who to hire. Ouija boards are just as reliable.

The hiring process is the single most stressful and time consuming duty of a manager. An employer will grab at any straw that promises to make the job a little easier. The old saying, "It's who you know," is the Golden Rule. When it comes to hiring, a manager is desperate for any reason to favor one person over another, because there is seldom any significant difference in any of them, and usually not many from which to choose.

Credit checks are used for screening future employees because it is easy. Every person's report is laid out in the same format. When a manager is asked why he hired a person, he/she can point to a box on a form and say, "He had a high number."

So businesses who actually employ people *think* the credit checks add value and are wiling to pay for it but politicians know better?

I can see you have never hired anybody and had to request these background checks.

 

[ksen]

Why would selfish and greedy and ruthless employers pay for credit checks when they wanted to hire someone if they were of no value?

You tell me.

 

[Nice Squirrel]

Why would selfish and greedy and ruthless employers pay for credit checks when they wanted to hire someone if they were of no value?

Who said they were smart? I've known employers who gave job applicants polygraph tests and used handwriting analysis to help decide who to hire. Ouija boards are just as reliable.

The hiring process is the single most stressful and time consuming duty of a manager. An employer will grab at any straw that promises to make the job a little easier. The old saying, "It's who you know," is the Golden Rule. When it comes to hiring, a manager is desperate for any reason to favor one person over another, because there is seldom any significant difference in any of them, and usually not many from which to choose.

Credit checks are used for screening future employees because it is easy. Every person's report is laid out in the same format. When a manager is asked why he hired a person, he/she can point to a box on a form and say, "He had a high number."

It also allow them to eliminate applicants on a whim. That's what these reports really do. I never looked at anyone's financial history, because those who often had "poor" credit usually had low paying jobs and had kids. They were coming to me for a better paying job.

 

[Starr]

Past job performance and reference checks would be much more reliable and accurate than relying on credit reports.

Past performance and references can be tricky as well. Most companies (at least large ones, with professional HR departments), will not say any more than "X worked here from A to B". They will not give a reason for the employee leaving, they will not give a performance review. Similarly, any references an applicant will provides will be positive. I was taught never to say anything negative about someone if I was called as a reference (and I would never tell someone they could use me as a reference if I had anything bad to say about them).

The reason for this was explained to me by an HR rep at a company I once worked for as fear of being sued for what is called tortious interference. Basically, you can be sued if you interfere in
someone creating a business relationship or creating/fulfilling a contractual obligation. Depending on the jurisdiction, this can include interfering with the formation of an employment contract (and in some cases preventing someone from being hired in at-will states, where there is no formal contract).

 

[Jarhyn]

Honestly my credit history has been pretty awful in the past. Well below a 600. Even so I maintained a Secret clearance because I would sooner live on the streets than knowingly take money from an unethical bastard to do something unethical.

Having a bad credit report means that you had needs and not enough money to meet those needs. Sometimes people just don't understand how credit works. What having bad credit means among the 99% is that you have been poor. Pretty much everyone nowadays has been poor, had bills they can't pay, and has had to take low enough wages that they have been forced to borrow money they can't pay back. Credit checks for employment are completely bullshit. Another barrier to self-improvement that should rightfully go away.

 

[dismal]

Who said they were smart? I've known employers who gave job applicants polygraph tests and used handwriting analysis to help decide who to hire. Ouija boards are just as reliable.

The hiring process is the single most stressful and time consuming duty of a manager. An employer will grab at any straw that promises to make the job a little easier. The old saying, "It's who you know," is the Golden Rule. When it comes to hiring, a manager is desperate for any reason to favor one person over another, because there is seldom any significant difference in any of them, and usually not many from which to choose.

Credit checks are used for screening future employees because it is easy. Every person's report is laid out in the same format. When a manager is asked why he hired a person, he/she can point to a box on a form and say, "He had a high number."

It also allow them to eliminate applicants on a whim. That's what these reports really do. I never looked at anyone's financial history, because those who often had "poor" credit usually had low paying jobs and had kids. They were coming to me for a better paying job.

If I am engaged in the actual act of expending time and resources to try to hire someone how does it benefit me to "eliminate applicants on a whim"?

 

[Malintent]

My organization uses credit reports to determine the degree someone may be motivated to steal from the company. Someone with a good credit history may be less of a threat than someone with a history of unmanaged debt.
Credit checks during background security evaluations are usually limited to people that would have access to large sums of money within Finance, or access to product in Distribution. The basic IT worker, as an example, would not have that imposed. I feel my organization is very fair with this sort of thing. As a related example, they are eliminating marijuana from their drug screen tests for DoT in-scope jobs (commercial truckers, for example, that are required to undergo pre-screening and random drug tests by the federal government). Pot smoking is legal enough to no longer be defensible as a reason to not hire or to fire.

 

[Malintent]

Honestly my credit history has been pretty awful in the past. Well below a 600. Even so I maintained a Secret clearance because I would sooner live on the streets than knowingly take money from an unethical bastard to do something unethical.

Having a bad credit report means that you had needs and not enough money to meet those needs. Sometimes people just don't understand how credit works. What having bad credit means among the 99% is that you have been poor. Pretty much everyone nowadays has been poor, had bills they can't pay, and has had to take low enough wages that they have been forced to borrow money they can't pay back. Credit checks for employment are completely bullshit. Another barrier to self-improvement that should rightfully go away.

"needs" beyond your means like gambling debts, drug addiction, mental illness, or just straight-forward irresponsibility?

 

[Nice Squirrel]

It also allow them to eliminate applicants on a whim. That's what these reports really do. I never looked at anyone's financial history, because those who often had "poor" credit usually had low paying jobs and had kids. They were coming to me for a better paying job.

If I am engaged in the actual act of expending time and resources to try to hire someone how does it benefit me to "eliminate applicants on a whim"?

Saves you time.

 

[dismal]

If I am engaged in the actual act of expending time and resources to try to hire someone how does it benefit me to "eliminate applicants on a whim"?

Saves you time.

If I don't want to hire someone, wouldn't not looking for employees save even more time? And the credit report fees?

 

[KeepTalking]

Honestly my credit history has been pretty awful in the past. Well below a 600. Even so I maintained a Secret clearance because I would sooner live on the streets than knowingly take money from an unethical bastard to do something unethical.

Having a bad credit report means that you had needs and not enough money to meet those needs. Sometimes people just don't understand how credit works. What having bad credit means among the 99% is that you have been poor. Pretty much everyone nowadays has been poor, had bills they can't pay, and has had to take low enough wages that they have been forced to borrow money they can't pay back. Credit checks for employment are completely bullshit. Another barrier to self-improvement that should rightfully go away.

"needs" beyond your means like gambling debts, drug addiction, mental illness, or just straight-forward irresponsibility?

Or: medical bills, job loss, caring for family members who are not supported by our social safety nets for one reason or another...

 

[Nice Squirrel]

Saves you time.

If I don't want to hire someone, wouldn't not looking for employees save even more time? And the credit report fees?

Why yes. If you are not looking to hire somebody there is no point in illegally obtaining a credit check and such a response to this thread is pointless.