Credit checks for employment: a poor subsitute for good internal security?

[Le Jacquelope]

What say you?

 

[R. Richard]

If a credit check is part of a comprehensive check before hiring a new employee, then it is a useful part of the check. If the credit check is most of/all of the pre-employment check, then I would say that it is not really useful.

In each of the last couple of jobs I had, the worst employee we had could not pass any sort of credit check. I don't know if the good empoyees could have passed a credit check. The reason that I knew of the credit problems of the bad employees was that the company would get dunning calls from creditors. In one case, the second worst employee I have ever worked with was evicted from his apartment in the middle of a product delivery crunch. Someone said, "Well, we don't know why he couldn't pay his rent." Someone else said, "Maybe the reason had something to do with him buying a fancy, expensive supper, with champagne, for some lady downtown last night." [I did some checking and he did spend a bundle on some female. However, per several ladies of my acquaintence, the bitch was no lady.]

 

[Liar]

But what is it useful for? A credit check only does one thing - indicates your ability for long-term payments. For subscriptions, loans, et al.

Since I'm not signing up to pay the company I work for (I'd rather see that they pay me), why the fuck do they need a credit check of me at all? In fact, I think I should do a credit check on them.

 

[MagicaPractica]

Well, on it's own, a credit check is not sufficient but it could be a useful tool. Have you ever looked at your credit report? It gives a lot more information than your credit score.

 

[Le Jacquelope]

If a credit check is part of a comprehensive check before hiring a new employee, then it is a useful part of the check. If the credit check is most of/all of the pre-employment check, then I would say that it is not really useful.

In each of the last couple of jobs I had, the worst employee we had could not pass any sort of credit check. I don't know if the good empoyees could have passed a credit check. The reason that I knew of the credit problems of the bad employees was that the company would get dunning calls from creditors. In one case, the second worst employee I have ever worked with was evicted from his apartment in the middle of a product delivery crunch. Someone said, "Well, we don't know why he couldn't pay his rent." Someone else said, "Maybe the reason had something to do with him buying a fancy, expensive supper, with champagne, for some lady downtown last night." [I did some checking and he did spend a bundle on some female. However, per several ladies of my acquaintence, the bitch was no lady.]

And all bad employees have bad credit?

Why not just publicly list their credit rating and put them on an employment blacklist so they remain bankrupt forever?

I run a data center where we don't bother with credit checks. It's simply not useful. We have plenty of REAL systems to defend us against bad employees and employee theft: real security against employee malice, etc.

What good is a credit check when someone with good credit nonetheless still steals from you to enrich him/herself? Good security prevents that from becoming a problem - employers are lazy, they spend less time on PREVENTING employees from stealing from the company and more time trying to "profile".

Profiling is how a buncha Saudi Arabian dudes flew airplanes into the Twin Towers...

 

[Le Jacquelope]

Well, on it's own, a credit check is not sufficient but it could be a useful tool. Have you ever looked at your credit report? It gives a lot more information than your credit score.

Which information in there is relevant to your ability to do a job?

It's all profiling.

You get better job performance "omens" from reference checks.

 

[Joe Wordsworth]

I think a credit check is a strong indicator of what kind of person you're dealing with. If someone has tons of unpaid medical bills, collections accounts, bad debt, and a poor history of living up to their financial obligations... then I think that indicates an attitude toward commitments and promises that I wouldn't want in a business.

On the other hand, someone with an 800 Beacon score? They can pay their bills, they can manage their time and money, they make good decisions.

Its not /all/ the information, but its information. And more is better when my money is on the line as an employer.

 

[Le Jacquelope]

I think a credit check is a strong indicator of what kind of person you're dealing with. If someone has tons of unpaid medical bills, collections accounts, bad debt, and a poor history of living up to their financial obligations... then I think that indicates an attitude toward commitments and promises that I wouldn't want in a business.

All that tells me is they were poor and got sick and couldn't pay both their rent and their medical bills.

On the other hand, someone with an 800 Beacon score? They can pay their bills, they can manage their time and money, they make good decisions.

Or they're good at screwing others over for a buck.

Its not /all/ the information, but its information. And more is better when my money is on the line as an employer.

And if their previous employment references say they're good workers with integrity, then what?

I believe employment references over credit checks.

 

[Joe Wordsworth]

All that tells me is they were poor and got sick and couldn't pay both their rent and their medical bills.

To be fair, LT, what it tells you is that they may have problems managing their lives, or they may have bad judgement, or they may be victims of circumstance. If all a bad credit score tells you is that they were poor and sick--then you have a very biased view of people and their ability to make bad decisions... one that is, regrettably, more favorable than is likely, bordering on naive.

Or they're good at screwing others over for a buck.

Very true. But, that they can pay their bills on time, maintain credit accounts in good standing, and adhere to their contractual agreements have less--I think--to do with the likelihood of "screwing others" and more to do with the likelihood of "however they /got/ their money, they manage it very well".

And if their previous employment references say they're good workers with integrity, then what?

Then their previous employment references said they were good workers.

I believe employment references over credit checks.

I am less likely to believe someone's opinion on the job performance of a potential friend, loved one, sympathetic former co-worker or boss, etc. than I am to believe the objective account of their financial history. On the one hand, it is nice to have good references and they indicate--on the face of it--an ability to leave positive impressions on people. On the other hand, references are phantoms--they can have names and occupations and history that have nothing to do with the job at hand. References can simply lie. Friends and family can be "references"--even "employment references".

I have known too many managers that don't want to hurt employees OR risk legal action by being bluntly honest about their actual job performance. I take a personal or employment reference as a good piece of information, but an inherantly subjective piece of information.

 

[sr71plt]

To be fair, LT, what it tells you is that they may have problems managing their lives, or they may have bad judgement, or they may be victims of circumstance. If all a bad credit score tells you is that they were poor and sick--then you have a very biased view of people and their ability to make bad decisions... one that is, regrettably, more favorable than is likely, bordering on naive.

Bingo. How you handle your life seems legitimate information for someone considering hiring you for a job--the more so the more responsible the job is. And you can say you would handle a job differently from handling your life, but that's pretty much a pipe dream.

Why would you oppose this unless you felt you would have a problem mustering up? Any time you want to buy something on credit, the lender can access all of this money anyway. Why shouldn't a prospective employer for a job requiring trust and stability have the same privilege?

If that's all they check, feel glad. Some of us had to have extensive background checks, intrusive polygraphs, the Myers Briggs "work style" test, and complete physicals, including psychiatric evaluation.

If you sense a problem, go for a job that doesn't require a credit check (or acknowledge to you that they check that, which they probably do).

 

[The_Fool]

A lot of companies no longer offer references other than to say they worked at the business between these dates due to liability.

Credit scores are a lot like grades in school or scores on placement tests. They are indicators rather than absolutes.

It also depends on the job, if the potential employee is going to be handling money and has a poor credit report, then the employer may choose to pass on that person if a) they would be making money decisions for that company or b) might be in a position to steal from the company out of desperation. That position is about risk management.

 

[Liar]

So on one hand we have an inherantly subjective piece of information in references. But relating to the persons ability to do a job well.

And on the other an ambiguous piece of information in credit checks. Relating to a person's ability to handle his personal finances.

Which is more relevant to you as an employer?

 

[The_Fool]

So on one hand we have an inherantly subjective piece of information in references. But relating to the persons ability to do a job well.

And on the other an ambiguous piece of information in credit checks. Relating to a person's ability to handle his personal finances.

Which is more relevant to you as an employer?

We are circling around two pieces of information that are to me minor in terms of the big picture.

What are the job skills?
What is the work experience?
What is the interaction between that person and others within my company?
What is the interest level?
What is the job?
What are the required qualifications?

I always take references with a grain of salt, because the employee picked them. Credit reports to me may or may not be applicable. I personally have never seen one, although I have signed applications that stated that the company could, at there discretion, pull a credit report on me.

 

[Joe Wordsworth]

So on one hand we have an inherantly subjective piece of information in references. But relating to the persons ability to do a job well.

And on the other an ambiguous piece of information in credit checks. Relating to a person's ability to handle his personal finances.

Which is more relevant to you as an employer?

I can further complicate this because I think easy answers are kind of silly--life just isn't so cut and dry.

Which is more important as an employer? To me? The Credit History is more useful to me. I can glean numerical, historical, statistic-able data from a credit report... up to and including information about their purchase habits (needed money for the job), their credit satisfaction (ability to meet obligations), their collections notices (ability to entirely neglect an obligation), how often they change cars, where they've lived, if they can balance a checkbook (bank accounts).

However, I believe that we shouldn't check people's credit reports for jobs.

 

[slyc_willie]

If good credit was necessary for a job, I wouldn't be hired. I've got tons of medical debt, and I made some stupid credit purchases in my life. But that wouldn't make me a bad employee. Where I work, I'm considered one of the most dependable, ethical, and professional employees. that's why I'm in the position I'm in.

I agree that for some jobs, a credit check might be a good thing to include (such as someone applying for a job as a bank teller), so long as it is accompanied by extensive interviews and background checks.

 

[MagicaPractica]

Which information in there is relevant to your ability to do a job?

It's all profiling.

You get better job performance "omens" from reference checks.

I look at it more as a way to cross check some things that people say in their interview, such as where they've lived. Might help weed out a compulsive liar. I was rather surprised when I saw my credit report all the information on besides my direct credit information. I certainly would never choose or exclude a potential employee based on their credit score.

 

[S-Des]

I think a credit check is a strong indicator of what kind of person you're dealing with. If someone has tons of unpaid medical bills, collections accounts, bad debt, and a poor history of living up to their financial obligations... then I think that indicates an attitude toward commitments and promises that I wouldn't want in a business.

It tells me you have a shocking lack of understanding about how credit works and it's relation to potential job performance. While it is possible to gleam warning signs from a credit report (if the circumstances are extreme enough), it's about as reliable as asking their ex girlfriend/boyfriend what they thought about the individual. The information is incomplete, thoroughly unreliable, and doesn't tell any portion of the story, except the result. Credit theft, emergency medical procedures, irresponsible ex who damages your credit, misreporting by companies, errors by the credit agencies themselves . . . seriously, it is pathetic that it's come to this. My credit shouldn't be any part of my company's business. If they do use it, using it as a blanket yes/no is incredibly ignorant.

 

[JAMESBJOHNSON]

Credit checks for employment exist solely to artifically restrict the supply of labor and increase wages. Credit checks also provide management with a tool to identify and eliminate potential job competition.

 

[sr71plt]

It tells me you have a shocking lack of understanding about how credit works and it's relation to potential job performance. While it is possible to gleam warning signs from a credit report (if the circumstances are extreme enough), it's about as reliable as asking their ex girlfriend/boyfriend what they thought about the individual. The information is incomplete, thoroughly unreliable, and doesn't tell any portion of the story, except the result. Credit theft, emergency medical procedures, irresponsible ex who damages your credit, misreporting by companies, errors by the credit agencies themselves . . . seriously, it is pathetic that it's come to this. My credit shouldn't be any part of my company's business. If they do use it, using it as a blanket yes/no is incredibly ignorant.

I don't see any evidence given that the credit report is used as a sole checking tool by an employer. Must of what is posted here seems to rail against something that hasn't been stated as happening anywhere--sole dependence on a credit report for a job offer decision.

Don't think this is anything knew or suddenly more stringent, though, 35 years ago when I went through a course on identifying people who, umm, had gone to "the other side," we were told that people who didn't pay cash for their groceries and/or gas at the pump were put on the suspect and watch list, because they obviously were in financial straits and therefore susceptible to committing treason. (Scared me so much that I still do pay for groceries and gas with cash.)

 

[S-Des]

I don't see any evidence given that the credit report is used as a sole checking tool by an employer. Must of what is posted here seems to rail against something that hasn't been stated as happening anywhere--sole dependence on a credit report for a job offer decision.

Don't think this is anything knew or suddenly more stringent, though, 35 years ago when I went through a course on identifying people who, umm, had gone to "the other side," we were told that people who didn't pay cash for their groceries and/or gas at the pump were put on the suspect and watch list, because they obviously were in financial straits and therefore susceptible to committing treason. (Scared me so much that I still do pay for groceries and gas with cash.)

My girlfriend was fresh out of a divorce with two kids. She had a decent stint as a teacher, but lost her job because the kids got sick several times in a 2 month period. After looking unsuccesfully for a good job, she finally got an interview with Hertz, doing front office stuff (practically rocket science . . . right?). She got the offer through a family member who worked with the company, and had a wonderful interview where she was assured she had the job. They did a background check, then didn't contact her for a week. Finally, she got through to a manager, who told her that her credit score wasn't "adequate".

Her sin? She had fine credit, but had an ex husband (and a divorce that dragged out for over a year) who had terrible credit, which killed her rating. She tried explaining this to the person who had told her a week ago that she'd be starting any day, and he said it was out of his hands.

I've had bad credit my whole life. I've also never been asked to leave a job (other than when departments closed). Anyone who thinks that credit is some "window to the soul" of people is an idiot.

 

[Le Jacquelope]

To be fair, LT, what it tells you is that they may have problems managing their lives, or they may have bad judgement, or they may be victims of circumstance. If all a bad credit score tells you is that they were poor and sick--then you have a very biased view of people and their ability to make bad decisions... one that is, regrettably, more favorable than is likely, bordering on naive.


Very true. But, that they can pay their bills on time, maintain credit accounts in good standing, and adhere to their contractual agreements have less--I think--to do with the likelihood of "screwing others" and more to do with the likelihood of "however they /got/ their money, they manage it very well".


Then their previous employment references said they were good workers.


I am less likely to believe someone's opinion on the job performance of a potential friend, loved one, sympathetic former co-worker or boss, etc. than I am to believe the objective account of their financial history. On the one hand, it is nice to have good references and they indicate--on the face of it--an ability to leave positive impressions on people. On the other hand, references are phantoms--they can have names and occupations and history that have nothing to do with the job at hand. References can simply lie. Friends and family can be "references"--even "employment references".

I have known too many managers that don't want to hurt employees OR risk legal action by being bluntly honest about their actual job performance. I take a personal or employment reference as a good piece of information, but an inherantly subjective piece of information.

That's why there are personal references and business references. I pretty much run a business when the owner is gone - a local financial services company. A good number of my employees wouldn't have jobs if we went by your way: a major portion of that was utterly ruined by the tech crash. We have a LOT of people both locally and rurally (Oklahoma, etc.) outsourced - and we've got a pretty good staff with absolutely no customer complaints about theft that traced back to us.

I expect that when we expand again we'll be seeing a lot of ruined loan agents soon. I'm simply not allowing credit checks at this outfit and it simply has not harmed us.

BTW how does a bankrupt person ever put their life back together if credit checks keep them away from employment? What was once a temporary setback becomes permanent - and you still are not shielded from OTHER people with pristine credit records who might still do you in. What was Ken Lay's credit rating going into Enron?

 

[Le Jacquelope]

I don't see any evidence given that the credit report is used as a sole checking tool by an employer. Must of what is posted here seems to rail against something that hasn't been stated as happening anywhere--sole dependence on a credit report for a job offer decision.

There is a dental company in this area that fits your criteria here. If you have a single bankruptcy they will not hire you. For a $10/hr phone rep job.

Don't think this is anything knew or suddenly more stringent, though, 35 years ago when I went through a course on identifying people who, umm, had gone to "the other side," we were told that people who didn't pay cash for their groceries and/or gas at the pump were put on the suspect and watch list, because they obviously were in financial straits and therefore susceptible to committing treason. (Scared me so much that I still do pay for groceries and gas with cash.)

So now instead of the Government playing that stupid game, we have corporations doing it. Hmmmm.

 

[S-Des]

BTW how does a bankrupt person ever put their life back together if credit checks keep them away from employment? What was once a temporary setback becomes permanent - and you still are not shielded from OTHER people with pristine credit records who might still do you in. What was Ken Lay's credit rating going into Enron?

That's the funny part about pseudo-intelluctual business people who think they're smarter than everyone else. It's nothing for a business or wealthy person to declare for bankrupcy, hire a lawyer and turn things around (Donald Trump anyone?). But have some poor schmuck with a handful of late payments and a complaint of an unpaid debt by a scam organization (yes, that torpedoed my credit for a number of years), and they tell us we're not "fit" to work for them. It's a double standard and anyone who says different is a liar.

 

[sr71plt]

If you want to reverse this trend (if it is a trend), I'd suggest the first thing you try is to vote the Republicans out of office. I'm a socialist myself, so none of this would happen in a system I chose.

 

[Le Jacquelope]

That's the funny part about pseudo-intelluctual business people who think they're smarter than everyone else. It's nothing for a business or wealthy person to declare for bankrupcy, hire a lawyer and turn things around (Donald Trump anyone?). But have some poor schmuck with a handful of late payments and a complaint of an unpaid debt by a scam organization (yes, that torpedoed my credit for a number of years), and they tell us we're not "fit" to work for them. It's a double standard and anyone who says different is a liar.

Or when these rich CEOs send your job overseas and you're stuck working at McDonald's and you default on bills, lose your house, car, etc., and then go bankrupt after running up credit cards trying to make rent and bills, and then you have to go through the humiliation of taking account of all of this to a nosey human resources person who doesn't even have to care what you went through? All they see is you failed to meet your obligations and that's it, you're permanently blacklisted from having any job, anywhere - if the credit checking agencies (who sell their services) had their way, that is.

BTW that scenario I just related? That happened suddenly to tons of aerospace workers, tons of people during the dotcom crash, and it is happening again to legions of freshly laid off loan officers right now as we speak.

Meanwhile, Ken Lay, with his perfect credit, comes into that same company and runs it right into the ground and scams its workers out of billions of dollars. Fat lot of good a credit check did them.

I fought for my good credit rating with blood, sweat and tears, and I stared credit death in the eye. I know how easy it was to be thrown into ruin. Deus ex machina saved me. If I had gone bankrupt, I was still a darned good worker and I proved it very well. I truly doubt I'm the only such worker out there.