“It’s only when they’re down to a finalist or one or two finalists that they’ll run a background check,” he said. Though many employers run credit checks on some applicants, relatively few are turned down for a job because of bad credit, according to Rosen of ESRcheck. But correcting an error can take 30 to 60 days - long after an employer has made a hiring decision and moved on. Credit agencies themselves routinely caution anyone using their reports that the information may be inaccurate or out of date.
And if you’re turned down for a job explicitly because of bad credit, the employer has to give you a copy of the report.Įmployment screening consultants caution that credit histories should be used sparingly - in part because, as many consumers have learned the hard way, the information in a credit history isn’t always reliable. Job candidates have to be notified of the credit check and give their permission to access their credit data. The reports made available to employers don’t include the applicant's age or credit score, for example. Under current law, employers can access any job applicant’s credit history, with some restrictions. “They’re going to be a more motivated and inspired employee than somebody who hasn’t because they need the income more.” “The simple case is somebody who has lost a job and suffered damage to their credit score,” he said. In some cases, a job candidate with bad credit could even turn out to be a better worker, critics like Leonard argue. It would be like asking for hat size or if you can sing on pitch.
“There is no science, there is no evidence that supports the idea that an applicant’s credit history is reflective of a person’s propensity to steal or their suitability for employment generally,” said Adam Klein, an employment lawyer at Outten & Golden in New York. “If an employer hires an embezzler and did not do a credit report in a sensitive position and the employer was then sued for negligent hiring, the argument would then be: ‘How stupid were you for not to running a credit report?’” he said.Ĭritics of the practice argue that there is little research correlating bad credit with good job performance. Rosen, CEO of ESRcheck, which screens job candidates for companies. The conventional wisdom in using credit histories in hiring decisions is that a bad history of paying bills is a pretty good indicator of an employee’s reliability.Īnd if a new worker is to have access to large amounts of company cash or financial systems, it’s only prudent for a hiring manager to find out if the applicant has a pile of unpaid debts, said Lester S. That’s up from 43 percent in 2004 and just 25 percent in 1998.Ĭredit checks are used most frequently when hiring senior executives, workers with financial responsibilities or access to cash, and workers who would have access to confidential information about other employees, according to the survey. Of the roughly 350 employers who responded, 60 percent said they checked credit histories for some or all job applicants. Many applicants will never know employers aren’t required to explain why a candidate was turned down for a job.īut a recent survey by the Society of Human Resource Management found that many employers use credit checks to screen job candidates. There are no hard numbers on how often poor credit reports thwart someone's effort to find a new job.
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