Some employers run credit checks before deciding which candidate to choose. They can’t run a check without your permission, so you must first sign a form that allows them to check your credit history. You can choose not to sign it, but they can then choose not to consider you for the job.
Why would your boss care whether you have an outstanding payment on your car? Answers vary, but the gist is that employers think you need to be responsible with your finances before they can trust you. In other words, if you’re not dependable enough to keep your own matters in order, what kind of an employee would you be?
In an article on credit checks during a job hunt, CareerBuilder writer Rachel Farrell explains:
“Though many people argue that credit scores have nothing to do with their capabilities on the job, some employers say differently. Sixty percent of employers recently surveyed by the Society of Human Resource Management said they run credit checks on all or some potential new hires. That’s up from 43 percent in 2006 and 25 percent in 1998.
Opinions vary on whether this is fair. Supporters of credit checks don’t think it’s any different than checking a candidate’s references. But opponents see it as unfair — especially in this economy — because medical problems, divorce or a job layoff and subsequent missed bills can wreck an otherwise perfect credit score in an instant.
Unfair? Perhaps, but the practice is widespread and legal in most states. Employers must tell applicants if they were turned down due to a credit check. But recently, Illinois became one of a few states to prohibit the use of credit checks as a deciding factor in the hiring process. Well, kind of. As The Consumerist points out:
“Under the new law, employers may access credit checks under limited circumstances, including positions that involve: bonding or security per state or federal law; unsupervised access to more than $2,500; signatory power over businesses assets of more than $100; management and control of the business; access to personal, financial or confidential information, trade secrets, or state or national security information.”
So there are exceptions, and perhaps you can agree with all or some of them. The correlation between financial responsibility and handling money on a daily basis isn’t that far-fetched. However, credit checks as a hiring component are legal in most of the country and they are a problem for many job seekers.
The economy has not been kind to bank accounts, as employers have laid off workers, frozen or reduced salaries, cut 401(k) matches and been slow to hire. Jobless claims rose alongside foreclosures. Medical issues for the unemployed have put financial strains on families. Credit scores surely suffered. Much like the frustrating predicament that entry-level job seekers have where they need experience to even get a job to earn that experience, job seekers who need income to improve their financial situations are unable to get hired because of their finances. Therefore, even if you agree with credit checks, you can probably see why some job seekers are concerned about this practice.
Where do you stand on credit checks during the hiring process? Is Illinois doing the right thing by enacting this law or do employers have a good reason to check your credit history? Have you ever lost out on a job because of your credit history? Let us know.