Some States May Ban Credit Checks for Employment

[momisery]

I side with; you ... they will find a reason. What this credit check business is all about is making people PAY even if they are sick.. business is business after all.

[WhatMoney]

See my red highlight of your sentence above...you are missing the point on this - right now credit checks are done by approx. 60% of employers according to the latest news flash broadcast the other day. Eliminating credit checks will open the door wider for illegals to get into workplaces where before they wouldn't even take the chance to apply as to better jobs, therefore eliminating more jobs for everyone. Background checks may not catch anything and credit checks could catch illegally used SS numbers.

Did you miss my post about E-Verify? This is all a potential employer would need to check for a fake or stolen SSN. Credit reports are not needed and unreliable for checking one's legal status.

The reason illegals are hired is that their employers don't want to know their status. Verifying SSN for a new hire is voluntary. Blaming illegal employment on the illegals is missing the real target - the employers who know damn well what they are doing and who they are hiring.

Credit checks are usually done on higher level jobs and they are not looking for lack of citizenship or fake SSN's. As many have said here - it is just a weeding out process when there are too many applicants. A poor credit check or BK can be reason enough to send a rejection letter without even a phone interview.

Credit checks on employees is a relatively new trend. I have never had an employment credit check in my life, and most of my work required the highesl level of clearance in the country - four levels of security just to get into the nuclear weapons development area where I worked - clearances could take months of investigation by the FBI and Dept. of Defense. But never a credit score check. The only thing most employees were concerned with in the past was a criminal record or a record of civil litigation against a prior employer.

[flyinbroke]

See, I had to show my SS card, so the "use of the credit report" does not fly for this. They call Social Security and anything amiss will come up. They are using credit reports to weed out people. This is wrong, especially when credit can tank because of what the banks do...mine dropped nearly 100 points just from CLDs. I did not max them out; not even close. This is not what the report says though.

If someone can not pay because they have no work, then can't get hired because of their credit rating it becomes a vicious circle and there will be no way back to solvency for them or for the country as a whole. We are a nation of consumers, after all. No money or credit=no consumption.

WhatMoney, I was the same way...worked in cryptography and with nukes...and the only thing they looked for was BK or serious delinquencies. I hear they are backing off the BKs because there are so many these days, and a spy can't blackmail someone who already put it out there in public. They want someone with something to hide or unadulterated greed.

[Flamingo]

Most of you are probably not aware that I work very closely with HR and corporate matters. What I brought up in here is being discussed in corporate and I am sure other business circles. I wanted to toss it in here as it relates heavily to the subject as one of several things that can occur if credit checks are eliminated. Corporate and business policies could be changed asking more questions from a prospective employee (i.e., you may see more of the question "have you ever filed for bankruptcy") since they may not be allowed by state law to run a credit check. You don't need a credit check to see if someone has filed for bankruptcy or has a judgment on record. So will the prospect of discrimination as to bad credit and/or bankruptcy ever fully be eliminated since it is easily checked without a credit report. A prospective employee would never know if if public records were obtained as to judgments on record or bankruptcy on record as that could/would be included in a background check. Lots and lots of things to consider and that could occur. It has taken years to attempt to eliminate insurance credit profiling with several states now not allowing the practice but there are still many states that still allow it....That issue has not been fully solved and here comes another discrimatory matter right behind it...This will not be a matter that will be quickly resolved to everyone's satisfaction. Time will tell...

[flyinbroke]

Flamingo, this would lean more towards integrity to me. If you ask about BK, it is easy to check who is honest and who is lying. Regardless of financial status, I would rather have the honest person on my payroll.

Insurance profiling: most states still do it, I think only a handful have abolished the practice. My state has not.

[Pizza]

Corporate and business policies could be changed asking more questions from a prospective employee (i.e., you may see more of the question "have you ever filed for bankruptcy") since they may not be allowed by state law to run a credit check.

...OR such a question would be lumped with other illegal questions like "How old are you" and "Are you married". The question is unnecessary anyway because a background check will reveal the answer. Keep in mind that verifying a past bankruptcy is a lot different than obtaining a thorough record of all accounts owed and the payment history for each.

[backtoschool]

Unless you work in financial services, certain government capacities that require a certain type of security clearance, or the insurance industry, credit checks are usually done to simply verify identity as required by the Patriot act. Often the credit part of the credit pull is not even looked at.

I have a relatively high level job in the financial services industry but do not work with money directly. I have always had to go through extensive background checks as part of the application process. Here is what the procedure looked like:

1. My credit was "soft pulled" (ie no hard inquiry on my credit report) by a background check company, usually Choicepoint (which used to be owned by Experian, but not sure who they are owned by now) or some other large background check company. Only identity was verified and the reason for the pull was listed as "identity verification"

2. A criminal record check was pulled.

3. A driving record check was pulled.

4. An extensive background check was done where past employers were called and people not on my reference list as well as people on my reference list were talked to.

5. My educational degrees listed were verified.

Public records were not pulled on me. The most extensive part of the background check was the past employer check.

I had a friend go through a similar process for one of the Wall Street firms, and they pulled credit and public records, but that person was working more directly with money, so ymmv.

A bankruptcy is a public record, and it will most likely "get out" to people you don't want it to sometime in the next ten years. Some people who end up with a district or judge that publishes a lot of stuff on the web may even have their case indexed by Google. It is one of the prices we pay for our "fresh start" and most jobs are not going to hold your bankruptcy against you, especially in these times were people are choosing to walk away from their homes and cards, and the whole process is becoming less stigmatized.

By the way, the job I am currently in, I got post bk and it is in the financial services industry and they did do an extensive background check.

[Flamingo]

Flamingo, this would lean more towards integrity to me. If you ask about BK, it is easy to check who is honest and who is lying. Regardless of financial status, I would rather have the honest person on my payroll.

Insurance profiling: most states still do it, I think only a handful have abolished the practice. My state has not.

Absolutely understand but the bottom line means more to most businesses and that is why all sort of checks are done to begin with plus to comply with policies, legal requirements and insurance purposes. You will see lots of arguing and fighting on both ends of this matter just as what has occurrred and still occurs with insurance credit profiling. Change will be slow just as witih the insurance sector and will probably make things stricter in other areas for hiring purposes by many businesses.

[OhioFiler]

Is this really what you're so afraid of? Taking away their toys does not make positions magically disappear; high unemployment and its effect on spending does.

I have no fear. Where do you get the idea I fear something?

[backtoschool]

I have no fear. Where do you get the idea I fear something?

I think pizza was saying that you feared that removing credit screening would lead to a reduction in hiring.

I personally don't think that you said that out of fear, but I don't agree with you that forbidding the use of credit checks will lead to a reduction in hiring. Employers will simply get the information other ways. Everything that is in your credit report can also be gotten via a subscription to lexus-nexus or other services like that. More of those services will pop up as a result of credit reports being banned for employment applications. Employers are not going to take unnecessary risks. The only ones who will really suffer if credit checks are banned for employment screening are the stock holders of the big three credit bureaus.

[momisery]

When I got this job they did pull my credit which at the time was almost 800. My references and criminal record did not, and never has had a negative comment, all good. I was finger printed and I had the typical TEAM interview. My family, friends, husband and all references were checked. I work exclusively with the affluent moving their money for them, doing wires, pulling cash out and holding it for them to come pick up (which they never count), I open accounts for them, and I do all the reports so I guess you could say I have my fingers in the pie, and on the receipt for the pie.. and I would never ever steal a dime from anyone. But, I would be tossed out if they found out even though I have had nothing but excellent reviews, won bonusBux 4 times in the past 1.5 years, received several cards from my clients, they all rave about my professionalism and my knowledge of their accounts and when they need to move CD/money markets, over to better investments... I take great pride in my job, I took great pride in my credit score and my integrity.. so, do I sound like a crook to you? Credit scores mean nothing when you are facing losing someone you love you will give up anything you own to save them. Would I steal to save them? No, but I would beg, borrow, and hook.. lol.... Life means more than and credit score, that is what makes us all human beings is the respect for life. This practice makes people who have had a hard time but are very respectful people look like commmon criminals and ruins their chances to make a living. Once you have bad credit, many things cost more, like a car loan, your car insurance, if you need a loan you will pay more if you can even get one..... so, no job, or lower income jobs are the only ones left for you when you do what I do I would have to move into a person delivering mail between banks maybe, and everything would cost me more.. simply because gas prices went up that set off a disaster in the economy the ruined my husbands job, his health went down hill over stress and we had to pay huge medical bills.....but we should not be hired because you would be taking a risk with people like us??? Really??? Stupid is all that is.... If I was going to steal from you I would have already done it and therefore never had to file a BK....

[Pizza]

Absolutely understand but the bottom line means more to most businesses and that is why all sort of checks are done to begin with plus to comply with policies, legal requirements and insurance purposes.

Ask Enron, Montgomery Ward, CompUSA, Circuit City, AIG, General Motors, or Chrysler if their failures were due to employees having bad credit histories. The bottom line for businesses AND consumers credit scores are mostly affected by economic cycles and lack of cash. Pretty cut and dry, really.

Fences. Remember this thread about the wife that was turned down for a SALES position?

She didn't get the job and this was the explanation:

"...HR Business Partner and Employee Relations Manager (has) determined that we would not be able to move forward with an offer for employment if your background check shows more than 3 accounts in collections within the last year. An account is turned over to a collections agency when it is a certain number of days past due. That is what it means to be “in collections”. Unfortunately, it would not be a matter of our being comfortable with your explanation as to why there may be issues, it would be a matter of legal risk and corporate policy."

Gasp! A salesperson might be a crook?! Holy cow, I would never see THAT coming! Or... no, wait, could it be that an extremely obnoxious HR Manager just passed over someone who may have been perfectly qualified for the position? This may be an isolated circumstance, but if it becomes a standard weeding device, we may as well forget about coming out of hard times with a chance to get back on our feet.

Somehow as an HR employee, you feel comfortable about turning down others based on credit, but how comfortable are you knowing that you could be let go as a result of your own history (yes - they fire for bad credit also), or that if you were looking for another job, you could end up broke again as a result of being unemployable, without a chance of filing? As a collective group of BKers or soon-to-be BKers, we are all faced with this reality; why such opposition then?

Has there been an epidemic of insider thieves running off with bags of cash or merchandise, where the employer says, "OMG I should have checked their credit report, it would have told me everything!" Haven't seen it come up in any news reports lately. What HAS been all over the news is a tidal wave of defaults, coupled with long-term unemployment, and the cheaper and more available these checks are, the worse it could get for many people and their families.

[momisery]

Great post.. the real thugs and theives here were not those who are losing their homes and going BK.. they are the ones that either have a criminal record, or have good credit and live way above their income reported.. like madoff... I really believe this is just the start of a "gottacha" business plan.. if you don't pay you don't work period.. They pushed really hard to stop the BK's because some people should not have been able to file and get away with it. Interesting how they are willing to break and bend the law for their own purposes and then get upset about "common" workers doing it. Some NEW START if you can't get a job.

[Pizza]

Great post.. the real thugs and theives here were not those who are losing their homes and going BK.. they are the ones that either have a criminal record, or have good credit and live way above their income reported.. like madoff... I really believe this is just the start of a "gottacha" business plan.. if you don't pay you don't work period.. They pushed really hard to stop the BK's because some people should not have been able to file and get away with it. Interesting how they are willing to break and bend the law for their own purposes and then get upset about "common" workers doing it. Some NEW START if you can't get a job.

You betcha. If you get behind, your credit is screwed, and if you file bankruptcy and take a fresh start, your credit is still screwed. Nowhere in the checks and reports is there a stated reason. So in a nutshell, if you get behind, you're a liability to your new employer - even if you are a great candidate!

[momisery]

Another "great" tool they are using is personality testing too. I have never passed one yet, but I have worked for decades never missing work, always early always doing extra and my co-workers love me. The loss of course is not to me, but to those who pass me over due to their dumb tests. But it does hurt some people. When hubby was laid off over and over again he was pretty depressed. He had worked in his industry all his life, and did F&I and was a sales manager for decades, proven and seasoned. The car business is always cutting someone, so he was not too worried until he realized there were few jobs due to the recession. One of the larger companies in this are does personality tests. They tested him, after having a great interview where the GM wanted to hire him. The GM had to call him back and tell him he couldn't because of the dumb test. The GM was not happy about it, and hubby was destroyed.. So, his life is old, can't pass that test, the recession, and now his BK.... slap slap slap.. no wonder the guy about had a heart attack.