credit scores and employment....is it fair?

http://finance.yahoo.com/news/long-shadow-bad-credit-job-185119736.html



PEOPLE tend to think of banks and other lenders as the main users of credit reports. But over the last several decades, credit reporting bureaus have been selling their services to a much wider range of buyers.

“Credit reports are really seeping into the soil,” said Sarah Ludwig, co-director of the Neighborhood Economic Development Advocacy Project, a New York-based nonprofit. “It’s taken an outsized role in employment, housing and insurance.”

For those seeking a job, it can lead to what Chi Chi Wu, a staff lawyer at the National Consumer Law Center in Boston, calls “a bizarre, Kafkaesque experience.”

“Someone loses their job,” Ms. Wu said, “so they can’t pay their bills — and now they can’t get a job because they couldn’t pay their bills because they lost a job? It’s this Catch-22 that makes no sense.” It can also be a kind of backdoor job discrimination, Ms. Wu contends, given the numerous studies that demonstrate that those black, Latino or simply poor are more likely to have lower credit scores than those who are white and have means.

Experian, one of the big three credit reporting bureaus, states in its marketing materials, “Credit information provides insight into an applicant’s integrity and responsibility toward his or her financial obligations.”

But to Ms. Wu and others, a credit report says more about a person’s economic circumstances than his or her moral character. “Some people can go to daddy and say, ‘I can’t pay my bills, will you bail me out?’ ” Ms. Wu said. “And others can’t.”

Nearly half — 47 percent — of employers use credit checks when making a hiring decision, according to a 2012 survey by the Society for Human Resource Management. Most businesses use credit checks only to screen for certain positions, but one in eight, the survey found, does a credit check before every hire. “We’ve heard from dozens of people over the past several years who say they’re being denied jobs specifically because of a credit check,” Ms. Ludwig said. The people contacting her group, she said, are “mostly lower-wage workers,” especially those applying to big retail chains.

“Prohibiting the use of credit checks in employment is now our number one campaign,” Ms. Ludwig said. “Because it’s discriminatory. And because the last thing we need in a recession is another barrier to employment.”

Lawmakers in some jurisdictions have proved sympathetic to those arguments. Nine states have adopted legislation that curbs the use of credit reports to judge prospective hires — seven of them since the start of 2010. Representative Steve Cohen, Democrat from Tennessee, has sponsored federal legislation that would restrict their use. The New York Legislature and the New York City Council are considering strict new laws that would greatly limit an employer’s ability to do credit screening.

Advocates and lawmakers are already seeing the impact of their efforts. The Society for Human Resource Management started polling members about use of credit reports as a pre-employment tool in 2004. Over the years, the numbers were consistent: six in 10 businesses indicated that they used them. But in its most recent survey in 2012, that number fell to just below five in 10. That decline no doubt is the result, in part, of new state prohibitions and the attention the issue has received in the last few years, said Kate Kennedy, a spokeswoman for the society. But she also notes that her association has been educating its members in the importance of looking at “how relevant a credit check is for a particular position.".....................................................................................................


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well, its a foul situation....you lose your job thus get behind....then what?

 

Don't keep a lot of credit. I guess you can't do much about mortgages and such, but credit cards? C'mon.

I think for certain kinds of jobs, credit scores can be a good indicator of integrity etc. A jacked-up credit history is pretty good red flag, for certain jobs anyway. At minimum, it indicates you have the capacity to make a square deal, plan ahead, make decent decisions, etc.

If I were hiring someone, I'd look at their credit history (for certain types of work, anyway...)

 

Why go through all the trouble to know someone, having 3 sets of three digit numbers can not really judge a person character? Banks and people who establish credit use mathematical algorithms that are based on stereotypes, clearly anyone trying to start on their own will be face with this invisible bias.

You truly want to know who you're dealing with, ask around in their community where they live. Somebody who looks at a computer screen from New York city is gonna go with the computer says.

 

I understood that background checks that included a credit check were largely reserved for positions that required the handling of money. I guess that has changed.

 

For some jobs, its a must. I have a corporate credit card. U bet ur butt they checked my credit score. It also created havoc on my personal business as in the beginning, it was taken as 'too much revolving credit'. That ish was frustrating as it wasnt my own spending. It was eventually solved, thank the little baby Jesus.

 

That's completely untrue. The difference for a lot of people is they don't have someone to bail them out while they become better decision makers. The fact that they allow people under 25 have credit is almost criminal. At that point a lot of people don't truly understand the impact of credit. They don't get how a bad credit score can hurt you. Luckily for some they have parents who will bail them out when they make a bad decision. So the difference isn't about integrity its about who can afford to cover up their mistakes. I guarantee nearly every person who stole large sums of money from pensions and 401ks had great credit.

 

classism at its best

 

churches especially black churches need to stop preaching "If you believe in G-d and have a good attitude then you will be blessed/prosper"

that stuff is just maybe a 1/4 of it all. money management is next part of it. the most important is being educated on it all"

 

Yeah, I can understand if deal with the companies money in a direct manner so to speak, but outside that no. More over, I don't think I want to work for someone that's dumb enough to believe that a credit check on me is going to indicate what kind of worker I'm going to be. Glad I work for myself, and I don't use cc's. When I was in college I got into debt trying to pay tutition. What never dawned on me was, why pay to use my own money. Never again. I moved in with my parents for a year, then lived with my two brothers six months each and saved up all the money I could. I started an investment account, and that's what I borrow from when I need a "loan." Has worked wonders for me.

 

I have a friend that works in HR for her company and they don't use the credit check to determine what kind of employee you will be - they want to know if your debt/credit is so bad that you may be a risk to the company, i.e. will you embezzle money. But again, this is primarily for people who will be in a position to do so.

 

I've definitely heard of co's doing it, and I do agree with the situation you stated and other similiar one's. It's just amazing that other employers that are looking for employees for postions that don't involve quite the risk of embezzlement use it as a deciding factor. If I were looking, I wouldn't even submit a resume/app there.

 

I see your point. People with $$ connections aren't as likely to get behind, no matter what problems they get themselves into. They can "cover up the evidence" of their stupidity and lack of planning skills.

BUT -- a jacked up credit score shows the same stupidity and lack of planning skills, it's just that the person can't cover up the evidence. And in some jobs tthose qualities can't fly. So the credit score can be handy in checking out a person.

It's kinda like a criminal record. Doesn't always say you're a bad person, but...

 

The simple fact is it wont serve its intended purpose. If the purpose is to weed out incompetent people or people with very little integrity a credit check doesn't do that. It shows who can pay their bills and who can't. Like the article said what if you were laid off and jess credit cards to make ends meet. A low credit score doesn't show bad choices it just shows a period of desperation. This shit just punishes people for being poor.

 

Good man

 

So you're thinking that most people with bad credit get themselves into it that way? Maybe so. I don't know & hope to never find out.

I was thinking that people get into it by buying stuff they don't need and can't afford.

 

That's only one element but credit scores don't differentiate its solely based on inability to pay back debt. The minute you are delinquent your shit plummets. I owed 25 bucks on an overdue library book once that shit dropped my score 76 points. I had to fight tooth and nail for a year to get that 76 points back. Thank God I had a job to pay to get it taken off. It was hell. 76 points can be the difference between getting a place to live or living in your car fam or in this case finding other employment. It was 25 bucks owed and paid for but the bad score didn't change for a yearw which didn't show anything negative about me just a flawed credit system but like I said I doubt this will actually serve its intended purpose.

 

I remember back in the day this one comedian said his credit was so bad, he could even borrow money from his mama...HAA!

 

If employers go by the score that would make no sense at all, hopefully the only thing they are looking for is the ability to pay your debt back with the salary they are willing to offer you. If the job is for 60 grand a year and you owe more than that outside of mortgage and student loans, then I imagine the employer may become Suspicious. 25 dollars? No biggie.

 

Hmmmm,,,,

 

i want to believe they go in deep in the credit score to see what are you doing. The fed's scrutinize your ass especially if you are to get a secret clearance. also if you are to work for a financial institution you will be looked at close