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Should employers run a credit check on job seekers?
November 9th, 2009, 7:53 am · 23 Comments · posted by Peggy Lowe
Some job seekers are finding one more nervewracking hurdle to leap when applying for work: prospective employers are requiring a credit check.
I first learned about this when I wrote a story about Dwain Gallo for a Labor Day series I did. Dwain, a laid-off salesman now unemployed for over a year, applied for two jobs and checked the box on the application that asked if they could run his name through a credit agency. He felt it wasn’t fair, but hey, he was desperate and he didn’t want to hurt his chances at getting the gig.
“If you have credit problems, they’re equating it with a bad employee,” Dwain said. “In this recession, if you’re out of work, who hasn’t fallen behind on payments?”
State law doesn’t bar employers from running a credit check on a job-seeker, as long as the company provides written notice and offers the prospective employee a copy of the report. Additionally, if the company decides against hiring the applicant based on the credit report, it must inform him of that reason.
But when a Norwalk assemblyman tried to change the law recently, he was shot down by Gov. Arnold Schwarzenegger. Assemblyman Tony Mendoza, a Democrat, won approval for his bill (AB 943) that would have barred employers from looking at their prospective hires’ credit history. But Schwarzenegger vetoed it last month, siding with the California Chamber of Commerce, which argued that the bill added regulations to companies already struggling in a bad economy. Read the Chamber’s history and defense of their opposition here.
Well, we haven’t seen the end of this issue.
I talked with Mendoza on Friday and he told me he’d be bringing the bill back come January, despite his admission that he will probably get slapped down again by the chamber-friendly Schwarzenegger. Mendoza said the law is needed now more than ever.
“In this economy, many folks right now are falling behind on their payments,” he said. “That means they’re not getting that job.”
And even if he gets another veto, Mendoza said introducing another bill will keep the discussion going and put the next governor on notice that this is a problem.
“When we get a new governor, I hope he’s a litte more open-minded,” Mendoza said.
What do you think?
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23 Comments
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Run a Credit Checks on all current and prospect OC Register employees.
Though a credit rating is usually a good indicator of one’s character, this economic environment should preclude making a decision based on a FICO score. On the other hand, I know a few brilliant people who consider bill paying too mundane.
Why shouldn’t employers run a credit check? It’s easy to put on a perfect face at interviews but if you have a long record of evictions, collection agencies, lawsuits and liens, then why shouldn’t a prospective employer be able to know about it?
It always seems like the people with something to hide are the biggest complainers.
I worked for a company for 11 1/2 years and they ran a credit check on all employees every year. So what?
You miss the point. You have a job. Why wouldn’t you have good credit? But what about the people who made their living for example as real estate agents or mortgage company or bank employees who’s businesses shut down, leaving over 20% of the population unemployed for over a year who cant find jobs and can’t pay their bills therefore sacrificing their credit only to be able to pay for food and rent. If companies are going to consider your credit score to measure character flaws, the least they should do is look at the history going back to before their sources of income disappeared.
I can see a backround check but credit check? Come on people don’t we have enough Big Brother as it is?
Unless you’re in a finance or cash-handling job, I find it irrelevant.
By your own poll it’s obvious people believe this to be a privacy rights issue.
In the past I have allowed and employer to check my credit but at the time I did feel it to be an excessive need of information.
What if that info get’s into the wrong hands? we have a huge problem with identity theft, who’s to say the person checking those reports isn’t a risk?
If you handle money or are in a position of accountant you must be BONDED, so there is already a mechanism in place for a “bad” employee.
This practice should be stopped.
There are many qualified employees applying for scarce jobs. My experience from renting property is credit scores are a good indicator of reliability, integrity, dependability, etc. Yes it’s somewhat unfair to reduce a person’s character to a number, but it does provide another thing to help select the best applicant….in other words a “tiebreaker”.
That said, I wonder what the credit rating of the hiring company looks like?
Credit scores are only indicative of reliability, integrity, etc….if circumstances are such that the person has an income. It is then, that you can measure how responsible a person is with his money. When you are laid off or your company shuts down in an economic climate such as this, those circumstances should be considered.
I was laid off. Bush and the GOP wiped out the econemy. I lost every thing. car was repoed when the GOP stalled the unenployment ext. 4 week. now you tell me i can’t get a job. do to the fact that the GOP screwed everybody. My credit was good before this happened. but hay, forget the little guy lets just give wall street somemore money and that will fix everything.
Rob-Please don’t take this personally but maybe your spelling and punctuation on your resume should be checked over.
The fact that your credit was good before all of this happened would be good for you. It’s the other ones that have their credit reports with the evictions, bankruptcies, collection agencies reporting back for MANY YEARS are the ones that employers need to know about.
Gee Rob, spoken like a true red-diaper-doper-baby! NEVER take responsibility for ANYTHING!!!!!
True dat
So many people speaking without knowing. For starters, there is NO requirement for people who handle cash to be bonded. And it doesn’t matter if you are actually handling cash, so long as you have access to assets (re: inventory). We’ve had plenty of warehouse people steal inventory and then sell it to obtain cash. I wish we had run a credit report on one of our last managers, he had a HUGE tax lien (which we didn’t know about) and ended up stealing over $20,000. Unfortunately, the money was already gone by the time we found out (which was only one week later). And if you are concerned about the credit on the company you work for, BY ALL MEANS run a check on them. I think it’d be ridiculous NOT to check out a prospective employer.
you snobs in OC are funny it’s so easy to get you going
Well now, Rob, that’s an intelligent reply if ever there was one!! Seems maybe we “snobs in OC” have YOU going, eh?!
from my understanding is that each time you check your credit score they take off 5 points, what if i have 10 different applications sent to different employers, does that mean that mean credit company will deduct 50 points off my score, if so, this is unacceptable.
Hey Les,
I researched your question about credit checks affecting your score. From the preliminary work I’ve done, the answer appears to be “yes.”
I signed up and received my free credit report. Everyone can do this ffree once a year.
This is considered a “soft” request, so it doesn’t affect my score. However, I was given this warning under a section that reports how many checks you have undergone:
“Inquiries - Requests for your Credit History –Numerous inquires on your credit file for new credit may cause you to appear risky to lenders, so it is usually better to only seek new credit when you need it.”
I also have a call in to the Federal Trade Commission, so will get back to you when I get it. For more information on the free look at your credit report, go here:
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre34.shtm
Thanks,
Peggy
No credit checks for positions of employment. The govt creates the problems, then when people get bad credit because of it they can’t get a job.
Arnold you stink as a governator, go away.
Agree with you Joe: These companies complain they can never find good people so they hold out suing credit checks. Orange County has been very prosperous not running credit checks. I would never let a company run my credit check because of the reasons that Joe mentions. And IT”S NONE OF THEIR BUSINESS. I want to see their personal credit too. Not their company but their personal credit check. They can take a hike. Employers are no longer loyal anymore to put up with this.
I have not so good credit score.
however, it never affected me getting a job, I think as long as being cheapo worker they don’t care.
best is to work for yourself. not to worry about such things.
Put yourself in the shoes of a business owner and perhaps you will understand. As a former HR Director, as well as the souse of a business owner, there are numerous companies in which we have had to turn to running credit checks on employees to weed out certain types of individuals. And yes, it was our business. If you don’t like it, you needn’t apply there. There are many others who will.
I will try to put this diplomatically. Sometimes people who have financial problems are less likely demonstrate self -control when presented with opportunities to help themselves and their families. You don’t want anyone in the accounting department with poor credit. I’ve seen accounting employees take corporate credit cards and buy airline tickets for their family members, people put their entire family on a cell phone plan and expense it, administrative staff “steal” the frequent flyer miles of others, and the list goes on. One woman ran a bookkeepiing business on the side and did that work on our time. I’ve seen executives take their families out to dinner on the company credit card and buy expensive gifts for friends. A personal bookkeeper took the checks in our credit card bill and wrote them to herself. A well-paid domestic employee in our home used our credit cards to put gas in other peoples cars and kept the money, as well as buying restaurant meals and groceries for our family. In another industry, hotel workers stole from guest rooms, kitchen employees took expensive cuts of meat and sold them in their neighborhoods, bartenders pocketed cash sales, cases of amenities with our logo were found on the shelves of a neighborhood store, a purchasing agent accepted bribes from vendors, an entire department was videotaped leaving several hours early and one person clocked them out hours later so they would get overtime. The list goes on and on.
Again, Put yourself in the shoes of a business owner and maybe you will understand.
As a previous poster mentioned, “The fact that your credit was good before all of this happened would be good for you. It’s the other ones that have their credit reports with the evictions, bankruptcies, collection agencies reporting back for MANY YEARS are the ones that employers need to know about.” If you explain why you don’t want your credit report run (too many inquiries) offer to provide a copy of your own free credit report. People who have had a credit issue for a particular reason they could explain (issues during a divorce) were normally upfront, told us what to expect and why. Honesty is always the best policy.
By the way, if you exhibit these bitter hostile attitudes during an interview, you probably won’t get the job anyway, so no need to worry, You’ll never make it to being a final candidate and having your credit checked.
Lee, I would love to see your credit report and do a background check on you. It is rather intrusive of any employer to look at someone’s credit report for a job. It contains personal information that is none of your business. Anyone in the company (we do know this) can look into that report. Listen, Lee, you are the one with the attitude, and I would choose not to work within your Nazi constraints. Big brother you love because your the one doing the checking.