Credit Checks in the Hiring Process Draw Questions

Credit checks are used for many things like getting a car loan or a mortgage or even to rent an apartment.  This helps lenders and land lords decide if you pay your bills on time if at all.  They use it to evaluate if the risk of, giving the person the loan or rent agreement, is worth the reward.  This practice has been around for many years. 

Now employers are using them as background checks for potential employees.  This is good for people who work with money or access sensitive information.  This is not fair for someone who is a CNC operator who has been unemployed for a couple of years and has bad credit because of that status.

“Retailers lose more than $30 billion a year because of employee theft, he says. Workplace violence costs employers $55 million a year in lost wages. A third of employees provide bogus information on their résumés” (Martin, 2010).

There are state’s that are making legislation to make this practice illegal to do but credit reporting agencies, like Trans Union, think differently.  “Trouble is, researchers say there is no evidence showing that people with weak credit are more likely to be bad employees or to steal from their bosses, a fact that Mr. Rosenberg himself later admitted” (Martin, 2010).

I have heard that credit score or credit reports are even being used for car insurance rates.  I do not understand what this has to do with my driving.  I am assuming that there have been studies to show that there is a relationship to people who have bad credit reports and driving habits.

Credit reports or background checks cannot give an employer 100% guarantee that a future employee is going to be good or bad.  The employer needs to look at other aspects of the person to make an educated decision on whether the person is going to make a good employee or not. People may have a bad credit report due to things that have happened in their life that are out of their control like unemployment or even short or long term disability.

Reference:

Martin, A. (2010, April 9).  As a Hiring Filter, Credit Checks Draw Questions.  The New York Times.  Retrieved from

http://www.nytimes.com/2010/04/10/business/10credit.html?pagewanted=1&_r=0

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One thought on “Credit Checks in the Hiring Process Draw Questions

  1. I agree 100% to this response. I believe a scarred credit report has no reflection on a person’s work ethics. As stated in the response, credit checks are useful for getting a loan or even renting, because it is relevant to how the individual applying pays for their resources and debts. As stated in this quote, “Trouble is, researchers say there is no evidence showing that people with weak credit are more likely to be bad employees or to steal from their bosses, a fact that Mr. Rosenberg himself later admitted.” (Martin, 2010), there is nothing at all proving that credit is related to job performance. This was a perfect quote to cite that reflects the facts. Also mentioned in this response is the idea that a person’s credit could be related to a tragic event in their life; such as a layoff or disability issue. Performing a credit check is unfair to an applicant who has suffered these conditions. My favorite part in this response is how they use the idea that they have heard credit score is being used for car insurance rates. I highly doubt there will ever be any evidence proving that credit score affects a person’s driving habits.
    Brandy B.

    Martin, A. (2010, April 9). As a Hiring Filter, Credit Checks Draw Questions. The New York Times. Retrieved from http://www.nytimes.com/2010/04/10/business/10credit.html?pagewanted=1&_r=0

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