Do Potential Employers Really Run Credit Checks?

October 12, 2006 6:40 PM

How can having bad credit keep you from getting a job? I heard an ad from a credit counselor on the radio which said: "Don't let your bad credit rating keep you from getting a job." Just fyi, I live in the U.S.

I have heard the ad a number of times- so I am sure it was correct.

posted by wfc123 to work & money (16 comments total)

Yahoo HotJobs says:

"Some employers use credit checks as a simple character reference tool. A good credit report may indicate trustworthiness and reliability to a hiring manager. Others may use a credit report to learn if your debt load is too high for the salary a particular position pays. This could suggest that you might not remain in the position for very long."

(via lifehacker)
posted by one_bean at 6:45 PM on October 12, 2006

I've done temp jobs in banks where I had to get a credit check first. Presumably they don't want you handling other people's money if you're in a desperate situation with your own.
posted by nebulawindphone at 6:52 PM on October 12, 2006

A lot of bad debts might suggest financial desperation, which itself might suggest that the person might be inclined to resort to embezzling or other recreational forms of accounting in order to get himself out of that situation.
posted by jason's_planet at 6:54 PM on October 12, 2006

Here's some good background on the issue.
posted by zek at 6:55 PM on October 12, 2006

I recently didn't get an otherwise all-but-guaranteed job at a local bank because of a poor credit history (specifically a very recent major issue). (I know several of the employees and HR staff, had great local and non-local references, etc - but (non-local) HQ wants a good clean credit rating before hiring people and giving them access to and responsibility for other people's money. Makes sense, though apparently none of the other local banks do the same.)
posted by attercoppe at 7:11 PM on October 12, 2006

A friend of mine couldn't get hired as a salesclerk by Radio Shack recently, after a very promising interview. They told her upfront that it was her damaged credit record (and nothing major on it either, just late-pays, etc.).

It's not just banks anymore: most retail places run your credit, and most of the customer service places do too.
posted by digitalis at 7:11 PM on October 12, 2006

What everyone else has said. A very good friend of mine was promised two jobs last year "as long as something doesn't come up on your credit check." One was as a retail manager, one was in accounting at a local bank and she didn't get either. The bank job was an entry-level position that required only a high school diploma, yet she had just received her Bachelor's in accounting. They stated that they couldn't hire someone who was in debt but would have access to large quantities of money (even if one didn't involve physical access).
posted by Ugh at 8:14 PM on October 12, 2006

Bad credit will definitely bar you from working as an accountant.
posted by clevershark at 8:51 PM on October 12, 2006

I can understand bad credit keeping you out of financial services jobs, but from what I hear it's getting into everything. I guess in case of employee fraud. Cause as we've seen from Enron et al, it's always the employees who are the problem.

I consider these checks to be invasion of privacy, unless as noted above, you'll have responsibility over money. Even then, late pays on credit cards is something lots of people have, especially minimum wage earning cashiers. I do find it strange that companies who won't pay people a living wage then won't hire people who have money problems because they're not earning a living wage.

Anyways, to answer your question, it's another hoop that companies have added in an effort to prevent lawsuits, I guess.
posted by Salmonberry at 9:21 PM on October 12, 2006 [1 favorite]

Our background check company gives us a credit summary, but I've only seen a couple and they were pretty vague - the last one I saw simply said the person had a car note for $X and student loans for $Y, but that person was young enough to not really have any credit dings. I never saw my own background check, featuring some more colorful credit, but they hired me anyway. For us, the credit check is not as black and white as the criminal check, it's just that in the IT department you've got admin access to the accounting system, so if you're in really bad trouble we might prefer not to put that temptation right in front of you.

I think it's shady, especially because the credit-reporting industry is such a scam, but I think it's becoming pretty common.
posted by Lyn Never at 5:51 AM on October 13, 2006

It's not just fear of embezzlement.

Credit ratings are, statistically, a very accurate measure of responsibility and carefulness. For example, many insurance companies are trying to car price insurance based upon credit rating because a bad credit rating is a better predictor of having a loss event than a bad driving record.

As cruel as it may sounds, many of the things that people cite as "innocent" incidences of bad credit (like a terrible divorce or a temporarily disabling bad accident) are, of course, the consequence of bad judgment or lack of carefulness.

This makes it critical on the job hunt to get out front of your bad credit rating if you can make a compelling showing that the late pays or defaults were truly out of your hands. A big bureaucracy might not care, but when there's a human being making a decision, he or she can certainly weigh the value of the credit rating evidence against other explanations for the same facts.
posted by MattD at 5:53 AM on October 13, 2006

When I applied for my current position I was confronted about issues in my credit and asked to explain. I was shocked that there was a problem, as I knew my credit score was healthy.

Turns out that of the "thirteen accounts" I had open on my credit, all but one of them was closed, and the last one was in dispute. When I clarified this point, they dropped the issue and I got the job.

But it was an invasive, embarrassing experience for me and threw a huge shadow over the excitementt of getting a new job.

My boyfriend has a huge debt ($20,000) from his irresponsible youth that he's never missed a payment on and has spent years stamping out. His credit score is great because of his reliable and large monthly payments. And yet he is terrified to look for a new job, because he knows that it's basically a dealbreaker for most of the places he'd like to apply. Perhaps it's just a coincidence that these days a huge debt will keep people shut out of the kinds of jobs that would be helpful in getting them out of debt, but considering how much money is made off of debtors in this country, I have a more cynical perspective.
posted by hermitosis at 6:40 AM on October 13, 2006

My credit is pretty bad, and it's never prevented me from getting a job, nor has any potential (or current) employer ever run my credit report, that I know of. Sure, I've filled out employment applications that say the company may run a credit check. And I just think, Well, if you really consider that to be important, I guess that's a good indication that I shouldn't work for you anyway. But it hasn't been a problem. My guess is that it matters a lot more in the financial sector than in others. It's probably true that people who are bad with money are, well, bad with money. But there are plenty of people who are bad with money, but quite good with editing, or programming, or laying brick, or whatever kind of job it is that they actually do.

As far as Radio Shack goes, you're talking about the company that used to actually ask me for my mailing address every time I bought a pack of batteries. Which is to say, they seem pretty clueless about the relationship between people, money, and the services they provide. Their employees don't tend to be too bright, either.
posted by bingo at 7:36 AM on October 13, 2006

My credit is shamefully bad - we're talking a reposessed car, 1 federal student loan that finally got paid off by taking my tax returns for 3 years, and credit cards from 10 years ago that are still popping up to haunt me. It's never prevented me from getting jobs I've applied for, but I'm dreading going out next spring to find a new apartment.
posted by chickygrrl at 9:06 AM on October 13, 2006

...because a bad credit rating is a better predictor of having a loss event than a bad driving record.

Not really, and AFAIK, no studies have been published that prove otherwise. It's more an indicator of whether you're likely to pay your premium than and indicator of how likely you are to have an accident.

Though the company that I work for doesn't participate in this practice (yet - I'm sure it's coming), they definitely ran my credit before offering me the job. In this case, the better your credit, the more likely you are to conduct business in a responsible and ethical manner.
posted by mewithoutyou at 7:56 PM on October 13, 2006

I have a a huge case of credit dread. My employer also does credit checks as a part of the background checking.

I outlined my credit issues to my recruiting contact at the offer stage. I was vague and summarized them as problems due to unemployment and underemployment, and noted that meant some debt and late payments in my no-longer recent past. After airing my fears, she was able to tell me what to expect with respect to this position.

Similarly, when I was rental hunting, I had the same fears. However, a good job and a brief outline of what my new landlord was apt to find helped me make a good impression. I got the place.
posted by nita at 9:12 AM on February 9, 2007