“I’m sorry, Mr. Ford, but we are going to be unable to hire you because of some negative activity on your credit report.”
I think if I ever heard those words, I would cry foul.
I’ve previously said that your credit score matters, but I’m only just starting to learn about how important they can be.
Your Employer May Look at Your Credit Report
The Wall Street Journal reports that 1 in 6 employers look at a credit report. Now, that might just force you to think twice before you go and sign up for multiple credit cards or flippantly say, “Credit scores don’t matter; they are just an I love debt score.” Perhaps it would be more accurate to say that credit scores are an I love work score :). To be clear, companies do not have access to your credit score, but just your credit history, which is found in the form of a credit report.
In fact, several months ago, the House Financial Services Committee is discussing the ethics of this very practice.
Oct 19th, 2010 creditreport.com wrote:
This week, the Equal Employment Opportunity Commission plans to hear testimony about the practice. In sum, the Equal Employment for All Act would make it unlawful to base adverse employment decisions against prospective or current employees on consumer credit reports.
In Hawaii and Washington, it is already illegal for an employer to access a credit report.
Are people with a poor credit report worse employees?
I can see how this would generally make sense. Most people whom I’ve worked with who perform well on the job perform well in many aspects of life.
applicants for Transportation Security Administration airport screener jobs are rejected if they have more than $5,000 in overdue debt.
I think it is ludicrous that they have access to that kind of information. But it probably makes sense that your financial responsibility may indicate your overall level of personal responsibility (or am I just being judgmental?).
I haven’t hired very many people in my life – just a few support staff for this website. Most of the interviews were conducted via email. However, even without talking to someone, without looking at someone’s credit history, you know almost instantaneously if that person is a good worker and a good fit.
Sure, bosses should have access to any relevant documents, but I don’t think this is at the top of the list in terms of relevance. If they look at your transcripts, look at your employment history, and contact your references, isn’t that enough?
On the other hand, I do think this serves to remind all of us that what you do with your not-so-personal finances may become someone else’s business. Moreover, it shows that some employers think extreme levels of debt might impact your performance – and they’re probably right.
Either way, the case can still be made that paying some prudent attention to your credit score is a wise idea. That’s why a few months I signed up for Credit Karma’s free services. I wanted to monitor, in a general way, my credit activity and score. I’m not going to obsess over getting a good credit score, but I’m going to admit that the credit score impacts a lot more than just my ability to get debt – at least for now. We’ll have to see if the laws change any time soon.
What do you think – should employers have the right to review your credit history and base a hiring decision on those results?