Less-than-clean credit history may just cost you a job offer
Monday, September 11, 2006
By DIANE E. LEWIS
THE BOSTON GLOBE
LaToya Horton was temping at a management consulting firm in Boston in
January when it offered her a full-time job as a clerk. Then the firm
said it needed to check her credit.
Horton, 30, of Dorchester, Mass., didn't get the job; her credit report
showed $18,000 in deferred student loans.
"My credit wasn't perfect, but I never thought my student loans would
go against me," Horton said. "The company said I could reapply once I
had two years of excellent credit, but there is no way I am going to be
able to pay off those loans that quickly."
In the past, only banks and financial service companies routinely ran
credit checks on potential employees. But employers in other sectors
increasingly are including them in the screening process to assess
applicants' honesty and integrity, traits not readily gleaned from a
resume.
U.S. employers' use of credit checks increased 55 percent over the past
five years, according to Spherion, a recruitment and staffing firm with
offices around the country.
"The credit check has become a general measure of responsibility and
organization," said industrial psychologist Carl Greenberg, senior vice
president of Spherion. "If you cannot organize your finances, how are
you going to responsibly organize yourself for a company? Organization
is a measure of responsibility."
Companies are relying on credit reports because employers, afraid of
being slapped with libel suits, are no longer as candid about the
performance of former workers. And the aggregation of consumer data and
the Internet have made the information easier to access. Federal laws
require that companies notify job applicants before conducting credit
checks, but many firms reason that viable applicants with good credit
have nothing to hide.
"This is a trend that is becoming more common among employers who are
not in banking or financial services," said Chi Chi Wu, staff attorney
for the National Consumer Law Center in Boston, who says the trend
makes it harder for people who are laid off, newly divorced or saddled
with student loans to find full-time jobs.
"The prevailing view is that all of these people are irresponsible
deadbeats," she said. "But there can be many contributing reasons such
as identity theft, medical bills or a layoff. A lot of people are just
one paycheck away from financial disaster."
Jacqueline O'Sullivan, 48, who joined IBM as a field engineer in
January, decided to tell the hiring manager about her low credit score,
which was hurt by a divorce and graduate school loans. The company
understood. "I am fortunate to work at a company that understands that
people may have family situations," she said.
O'Sullivan, who repairs computer systems, said she knew she wouldn't be
placed at financial institutions because of her credit problems. But in
June, a client in another sector barred her from its computers because
of her credit report. "I was completely astonished," O'Sullivan said.
"To assume that because someone has bad credit they are less than
ethical and unable to do the job with integrity is unfortunate."
Joseph Giamboni, president of Forge Employment Resources in New Jersey,
said most employers are not that interested in the actual credit score,
but are looking for other information contained in the report. "The
credit check establishes the identity of a person," Giamboni said. "It
shows the full legal name, especially if you want to know if the person
has a checkered past. A lot of people change their names if they have
something to hide, and it lists former employers who might not be named
on the resume."
Applicant screening is just the latest use of credit reports that might
catch consumers unaware. Insurance companies have been criticized in
recent years for using credit information to set individual homeowners
insurance rates.
Matt Fellowes, a fellow at The Brookings Institution who has studied
credit, said 35 percent of U.S. employers were checking credit reports
in 2004, up from 19 percent in 1996.
But credit reports were not designed as a predictor of employability,
Fellowes said, and people who have thin credit files -- students, young
workers, the poor, the elderly -- tend to be at a disadvantage because
their scores do not predict how well they will behave in the future.
The reason: Too little is known about how they behaved in the past.
Fellowes said companies relying on credit scores when making hiring
decisions "could disqualify qualified candidates."