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    Default use of credit checks to evaluate job candidates

    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."
    Tim

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    It's a dang good idea -- but i agree with the comment that a bad credit report CAN be attributed to factors beyond your control, but generally, i would aggree with the conclusions that somone unable to manage their finances would be inadequet at managing your companies finances, and also, people with a high debt load probably ARE more likely candidates for embezzlement or fraud.

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    so how is someone who is straight out of school with a student loan going to get a job?
    Tim

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    hmm quite a vicious circle...

    can't pay off debt without a good paying job.

    can't get good paying job because of debt.

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    Originally posted by dennisaur
    hmm quite a vicious circle...

    can't pay off debt without a good paying job.

    can't get good paying job because of debt.
    I was thinking exactly the same thing.

    If I have enough money to repay the debt, I wouldn't need to get a job right away. I think it is kind of stupid.

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    I can see how an employer might be wary of hiring someone who they may think is irresponsible because of their credit rating, however i don't think that this is an accurate measure of assessing if a person is right for the job or not. Again, there are many factors that contribute to a credit score, and if an employer only knows part of the situation or nothing at all, then how can they assess a person's qualifications based on a number they see from a third party source? I think if this is to become a trend for hiring prospective employee's, they should only use this as a small part of the decsion process, while putting more weight and emphasis on interview, qualifications, references, job experience, etc.

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    Complete horsesh!t, what about people who's spouses, or ex-spouses have screwed they're credit, or identity theft victims etc.?

    If a potential employer were to ask for my credit report, I'd tell them to go fawk themselves, even though I've got perfect credit.

    What's next? A genetic sample to prove you don't have any genetic faults that could cause sickness and a possible leave of absense?
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    This is the dumbest shit I've ever heard. I had a delinquent cell phone bill that cost me a couple of loans..

    The problem is that there is no way to appeal anything or fix anything unless you hire a hacker to do the job for you.

    No one governs the reporting of credit.. which is a sad.. sad situation.

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    Most professions have VERY strict rules regarding financial position and insolvency:

    The reasoning goes like this:

    If you are insolvent or bankrupt, your morals and professional judgement may be compromised and you will do crappy work just to get a paycheck.

    It makes sense when you think about it but I think it is extreme in a case like this with student loans.

    "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered."
    -Thomas Jefferson 1802

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    I signed an agreement with my present employer saying they could run one when they felt it neccessary.

    It makes sense if they are going to give you a credit card right?

    It shows financial responsibility. However if the company wont hire you becuase you have loans that is not good, as long as you make your payments it should not be an issue.

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    Originally posted by NGRPLZ.NET
    This is the dumbest shit I've ever heard. I had a delinquent cell phone bill that cost me a couple of loans..

    The problem is that there is no way to appeal anything or fix anything unless you hire a hacker to do the job for you.

    No one governs the reporting of credit.. which is a sad.. sad situation.
    I agree, the credit reporting is poor. THere are 2 major companies that track credit. One of them didn't even have record of 5 years of credit card and cell phone records, the other had all sorts of stuff. I had worked to build up a record, but was denied loans because of "insufficient" history due to this lack of tracking. Now, years later, I have paid everything, a mortgage for a few years, car payments flawlessly, etc. and I still don't think my Fico score has improved...all stuff goes down easy, but a bitch to come up
    sig deleted by moderator, click here for info

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    bringing this back from the dead.

    I'm applying for a job thru a head hunter. I just got an email from the head hunter asking for authorization to perform a credit check on me.

    wtf?
    Tim

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    As the article says, if you are working in the Financial or working with cash then most headhunters/employers will ask for a credit check.

    Usually headhunters only ask for a credit check if the employer they are representing ask for it.

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    Also sounds like a setup for a identity theft. (Not that I'm saying your head hunters crooked, but it would be a good way to do it)
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