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If you apply for a job in Oregon today, your potential employer can ask to pull your credit report as part of the application process. A group of Democratic Oregon lawmakers have introduced a bill that would change that. People applying to work in a bank or law enforcement would still be subject to a credit check, but retail, food service and many other types of employers would be restricted from considering an applicant's credit history.
Lawmakers in Washington passed a similar bill in 2007, making the case that credit checks were an unnecessary barrier to employment for many middle class Washingtonians. Business interest groups argue that regardless of the job, a prosepective employee's credit history is relevant because it can be an indication of judgement and responsibility.
At least four other states have considered laws that would restrict employers' access to credit history as part of the screening process for employees. The federal government is also looking into changes to the rules that determine how credit checks are carried out.
Are you looking for a job? Do you think your credit history could hold you back from finding one? Are you an employer? What role does an applicant's credit report play in your hiring process?
Tagged as: employment · legislature · special session
Photo credit: Brooks Elliott / Creative Commons
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"Business interest groups argue that regardless of the job, a prosepective employee's credit history is relevant because it can be an indication of judgement and responsibility."
That argument can be made towards the other way, too. I have worked for two different employers who turned out to be dishonest and burned me on pay.
Kids ought to be taught in school the ways that business people use to abuse workers on pay, hours, safety, unemployment insurance, accident insurance, etc, so that they can be forewarned and protect themselves.
Kids should be taught about how Unions help protect workers against abuse by employers.
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Having my employer check my credit feels like a real invasion of my privacy. I had a pretty rough time several years ago that ended in a divorce and wrecked credit. I can't imagine having to share those details with my boss. I have a solid work history and I'm back on my feet financially but it will be years before my credit history is back to normal.
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Two things bother me on top of what others wrote.
First, credit reports are full of errors! How fair would that be to be denied a job based on an error that the credit reporting agency made?
Second, using credit reports is probably more being used as a way to find out things that an employer is not legally allowed to ask. For example, they can't ask you for your age, marital status, sexual orientation, if you have a disability, etc., but that might be something they can find out about via reading a credit report.
This is an excellent piece of legislation. Let's pass it.
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This is an idea I really like. I have been out of work for the past year and have been dealing with medical issues. I have fallen behind on my mortgage and have been stuggling to keep up on my bills. Needless to say, my credit is not so great. I need to get back to work!
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It's appalling, in this time of high unemployment and great financial strife -and with the emphasis out of the white house being about 'jobs' - that credit checking is a factor of being hired. Frankly, it's none of an employer's business how a potential employee's credit report reads. This is a necessary & timely piece of legislation that must be passed. Thanks TOL for bringing it to our attention!
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In general I think a person's credit score is not at all the business of an employer or potential employer, and has nothing to do with a person's job performance. I'm wondering, however, if maybe in some cases it would be reasonable for a potential employer to check someone's credit - like for someone who would have access to other people's money, like for bank employees or accountants, etc.?
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I really would like to know what my credit score or credit history, filled with potential errors that arise from mis-reporting by businesses, and mis-filing by the credit bureaus (Who are given too much influence over our lives), has to do with my ability to accurately and courteously ring up a customer's books at a bookstore, or to do any particular job.
Indeed, my credit history really has no more to do with my ability to do any given job than my medical history does.
I AM still looking for a job, after 21 months, and I know that in the past I have been passed over in favour of other candidates due to my credit report. No employer needs to know whether I have been late with the payment on my personal loan at the credit union, or missed a payment to EWEB (thank you California for causing our electric rates to get jacked up -- remember their flirtation with deregulation?).
Furthermore, my credit was okay until shortly after I became unemployed. Being unemployed is what ruined it -- I was forced to choose between paying a credit card bill, or payine EWEB, choose between making the car payment or paying the doctor's office (sort of important for an asthmatic to be able to continue seeing her doctor, you know).
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I have to agree that it is a way to look for information you are not allowed to ask while hiring, especially about medical history or other things that might cost the company itself.
But I also think that selling the credit history as a hiring tool adds more power to the credit industry itself, especially if the hiring company only looks at the score and not the specifics. People get to be obsessed about their credit scores and keeping them up.
Personally, I have a less than ideal credit score. Why? Because don't use credit most of the time. I don't have any credit cards. Except for my mortgage, I don't spend money I don't have. And my current mortgage is a private contract, so it won't show up on my credit history anyway. I don't owe anyone else anything. I pay my bills more or less on time. Always have. All of that makes me a bad credit risk.
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Hey all,
I have worked in the banking industry and it is all about credit when you get hired. I work in commercial transportation these days and all trucking companies use a report called a DAC (Hireright). If you have made any mistakes not only do you get a regular credit check, but you are subject to an in industry credit check. this report can ruin a career in commercial driving if a previous company doesn't like you.It is a way for the USIS to make more money. thanks.
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Oh, you awful distrustful citizens! Don't you have confidence in your financial institutions and corporations?
I mean, it's not like they're going to take your personal information and sell it to some unscrupulous data-miner. Okay, maybe they will, but isn't it worth it in return for the chance that they might possibly permit you to work for them and enrich their bottom line?
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NO! I DO NOT trust the financial industry or big corporations any further than I can throw them. I trust the credit bureaus even less!!!
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I lost a promotion at a Big Bank when they promoted me. I ran into bad times and they had no choice. 20,000 in college debt. Thats why I am in transportation. (they ran another check to see what my credit looked like!)
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How can business groups argue that bad credit is an indication of poor judgement or irresponsibility in a state with such high unemployment? And how do they expect people to dig themselves out of bad credit situations if we take away every chance for them to gain meaningful employment?
Passing this bill would give people a fair shot at getting their life back in order, and I'm all for that.
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I am a graduate student at Portland State University. Before I was a graduate student, I needed to take out student loans to pay for my undergraduate education. The loans ended up totaling about $45,000. What frightenes me about employeers checking my credit history is that this loan amount appears on my history as debt--just debt--the history doesn't say anything about the fact that the money I owe is for student loans. So a future employer looks at that history and thinks, 'he's not responsible; look at how much debt he has.' In the end, if this employer decides not to hire me because of my debt (the debt I accumulated getting an education so I could get a good job), where does that leave me. Checking a credit history as a part of a job application is absurd. If you want to know if an employee is responsible, then call his/her past employers. Getting a job is not getting a loan.
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I was just listening to the show and wanted to comment that it isn't just CEO's and CFO's that get their credit checked for jobs. A quick look at some Portland craigslist job postings shows that employers like "Sherrie's Pampered Pets" perform credit checks on perspective employees.
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I don't have a dog in this game, but the most important comment I have heard so far is from the person from the credit reporting company. As an employer, I am finding it more and more impossibe to get a detailed job reference from former employers because of fear of defamation law suits. As an employer I have a legal duty of care to investigate potential employees to insure that there is little liklihood that the employee will not cause a harm to my customers, my company, or other employees. If an employee does cause such a harm and a jury finds that I should have known about their history, I am liable.
My employees handle cash and have access to customers' credit and debit cards. If I can't get a job reference, I am forced to use driving record, criminal history record and credit record. Thats all I have.
Is it reasonable to ask me to apply for exemptions each time I have to hire?
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It's a vicious Catch-22. You can't pay your bills without a job, yet you can't get a job without good credit.
Shouldn't we be working to create more job opportunities for people rather than limiting their opportunities through credit checks?
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It is bad public policy to keep people who cannot pay their bills from gaining employment. It keeps poor people poor and prevents past due accounts from being paid.
Unless it can be shown that bad credit ratings come only from irresponsibility and not involuntary unemployment, they should not be used to screen job applicants. Or renters, for that matter.
I've walked out of a job interview because they wanted to check my credit. Most people aren't lucky enough to be in that position. Instead, they have to go through the humiliation of being refused a job because of previous unfortunate circumstances.
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For the employer who will only hire friends if he cannot check credit, maybe that is what he should do. I'm not sure I would want to work for someone who apparently has no judgment or ability to assess the person he is meeting.
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I suspect Bernie Madoff had an impeccable credit record and that did not stop him from being a thief.
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Even if there was a correlation between credit and job performance, it should never be used in the hiring process. Credit is determined by corporations, these man-made constructs should only be used in the acquisition of credit, which is what they are for. Any other use should be considered unethical and quite frankly inhumane. Using credit to essentially rate the quality and sum worth of a person is obscene and debased, and reeks of a modern day class system. It is one thing to use criminal history, which is at least predicated on the laws of the land, which are regulated and created by the government and essentially the collective people, but it is a step way too far to introduce the variable of credit.
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You would think the use of credit for employment would be regulated by the U.S. Equal Employment Opportunity Commission.
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Thank you Sen Rosenbaum! (my Senator incidentally) I'm unemployed and can't get a call back from jobs I'm completely qualified for... I don't need any additional barriers. Then there are the obvious privacy issues.
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I see peoples credit everyday who make between $12,000 to $150,000 a year and often those who have high end positions have poor credit, this is obviously not affecting their performance. The lady that you have commenting against the bill idicated that you can tell how people are spending their money which is not true unless you have an account at a specific store. If you use a visa card at safeway or at a ferrari dealership you would not be able to tell by the credit report.
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Excellent point: if you use a general purpose credit card (Visa, MasterCard) there is no way to tell from the cardholder's credit report where they used it. Certainly not in the same way that you can tell that someone who has a Macy's card uses it at Macy's (and possibly Bloomingdale's).
Did I mention, also that the credit reporting agencies -- Experian, Equifax, and TransUnion -- have way too much influence over our lives. (I'm not afraid to name names, nor am I afraid to say "Voldemort.")
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It just seems to me that the primary reason for a credit check would be to ascertain the "potential" that a person may engage in a criminal act based on financial distress. My contention is that this is predictive and discriminatory. A criminal background check would reveal the information that a person has not engaged in illegal activity. A credit check only demonstrates the possibility, and is extremely degrading under any circumstances.
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Just a further comment: When applying for many jobs, unless you give consent to a credit report, your application is round-filed, so it is a catch-22. My credit history is irrelevant to whether or not I can ring up a customer, but unless I consent to the credit check, then the last light of day my application sees is when I submit it and they say "Thank you."
Also, despite the fact that employers are not allowed to explicitly ask what your age, marital status, gender identity, or sexual orientation are, credit reports DO contain information that can reveal these things to an employer. (I have previous experience working at a credit union where I pulled credit reports on members who were applying for Visa cards.)
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I believe this bill is turely disturbing. There are so many other useful things these lawmakers could be doing, but yet they are mucking around in these small details.
1. If checking an applicants credit score is a bad way to screen for potentially good employees then the companies who do so will miss out on great hires. Those great hires will go to employers who don't use this possibly incorrect tool. The business will be punished for using this method.
2. If checking an applicants credit score is a great way to screen for potentially good employees then the opposite is true. Those people who care about their credit and work hard to keep that report in good shape will benefit by being offered better jobs possibly.
I presume (with no knowledge on the matter other than common sense) that there would be a discussion between the employer and employee on the results of the credit scrore, because honestly that stagnet number doesn't mean a whole lot alone. This is how capitalism works. Yet another exmaple of how the government is irresponsibly getting their hand involved in the work place. Sen Rosenbaum should spend her time working out the many problems with Oregon's pubic school system not this baloney. How much will this useless regulation cost Oregon taxpayers??!
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Any information given by the potential employee should be given in reverse by the owners and managers of the company.
The current case of Auto Zone is an example of why it should be so, the owners and managers of Auto Zone apparently made their employees work off the clock, that means work without pay, and they just lost their case. So all of their employees and future employees should be made aware of their unscrupulous business practices.
The unscrupulous business should have to notify any future employees of what they have done in the past.
In fact there should be a database made available to the public, just like the sex offender database, but that makes information about unscrupulous business owners and managers available to the public, so that the public can be forewarned about who they are dealing with and avoid them if they choose to.
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It seems to me that the companies checking potential employees' credit ratings are doing themselves a huge disservice by doing so. Your guest in opposition to the bill said that she believes that employers would not spend their time and money checking these credit scores unless they believed that they were of some value in the hiring process. That certainly seems evident. On the other hand it's common practice in some countries to weigh factors such as handwriting analysis in the employment application process. Wanting information is not necessarily the same thing as knowing what is actually valuable. The credit rating bureaus have clear records of innacuracies in their reporting processes. The reports themselves are often interpreted by HR employees -- people who are not truly qualified to understand the reports. How this helps companies make valuable hires is beyond me.
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I am a hiring manager that has hired well over 2500 employees in my career. I have never used a credit report nor would I ever, and that includes hiring the controller and the CFO for various companies I have worked for. Having access to credit reports is unnecessary and is discriminatory against minorities and disadvantaged. How someone has handled their personal credit has NO bearing on how a candidate would perform their job. It is MY job as a hiring manager to do my due diligence and conduct criminal background checks, verify prior employment and contact references. It is much more important to ask the right questions – Cindy Roberts claims tools are removed and that companies like Intel can only verify employment. This of course is COMPANY policy and if one asks the correct questions the answers are available. Emily asked about the legality – credit reports contain information that is considered illegal under Federal law for companies to ask during the hiring process.
Cindy Roberts is plain wrong. Trying to spin the unnecessary invasion of privacy as a necessary tool is irresponsible and akin to a statement that only well off white candidates should be considered for hire in positions where financial responsibilities.
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So how possibily would this bill be discriminatory against minorities? It looks like your drawing a parallel between bad credit and being a minority and good credit and beign well off and white. I can't believe statements like this are still made in this day and age.
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Because unlike for using credit reports for hiring purposes (just saying it sounds stupid, it is called a credit report - for credit worthiness) there IS statistical proof that credit reports unfairly impact minorities and the disadvantaged. So a skewed system for credit is being misapplied as a supposed hiring tool. This is a scheme from the credit bureaus and the companies that SELL credit reports to artificially inflate the presumed value of the product.
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I commend Emily and the TOL staff for another great discussion.
The gentleman caller, David at the half hour point in the discussion made a very important point. That we as a society place unreasonable importance on numbers rather than people. I would further that this is especially wrongful from governing and business standpoints about the qualifications of a potential employee. No less the millions of tainted and incorrect credit report records.
As a forced into retirement computer IT technician for nearly 30 years, designed and built my own home for my family, the recent debacle of the banks and failed government policies is proof that numbers games, credit records and especially related to jobs in the US, has been a serious mistake about how we scrutinize people and their potential as employees. The banks wrongfully foreclosed, evicted me in a 3 ring circus trial controlled by a local judge and disrespectful desperate lawyer from WAMU’s failed banks. I now have very have unreal information about my filing and dismissed bankruptcy and dated untrue reports of my credit on these so-called credit records that are now all controlled by secretaries in India!
A credit history is about as valid a dissertation of a real person as reading the checkout line scandal papers. [Read: much in outdated and wrongful information- No less the wrongful reading and misunderstanding of these records.] Employers use this as nothing more than a weeding out system and a weak crutch to deter otherwise valuable employees. Some may not know how wrong their decisions may be about how these records are read and misunderstood.
An important employee with years of artistic design experience, award winning artist, teaching in a local university, a vast record of near 30 years in computer operations for two of the largest computer operations on the west coast, would find nothing in credit records to praise this experienced employees background.
I strongly recommend that this new bill be considered passed, as wrongful credit reports are unlawful. It would help to greatly reduce the redundant, wrongful, and misuse of government information about consumers which does not serve the citizens of our nation in any benevolent or useful way.
Mark Seibold, forced to retirement, artist-astronomy educator, Portland OR
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I agree with Mark Seibold's submittal and have suffered a similar removal from the work force and lock out by its hiring procedures. I would like to extend the jist of Mark's comment to include an overlooked, yet profound reality, in the hiring process of most businesses.
The hiring process is illustrative of the adversarial relationship between the employer and the employee. With the job application procedures to seek out every snippit of possibly negatively suggestive information, it claims to be seeking an employee who has the attributes that the employer is not displaying in their employment process: Team player, go the extra mile, loyalty, works well with people, knowldegable, willing to accomodate work hours, creative, thinking outside the box, submissive, competence and so forth. These are attributes sought by employers but not shared by them.
I have applied for work since arriving in Portland one year ago and I am well qualified experiencially but I am not able to convey it to prospective employers because their application schemes are designed to remove me for qualities that have no relationship to the productive aspects or competence that I acquired in the reality of my work experience. I have not been able to even land an initial interview.
I submit that employers should shift their employee search mentality and procedures to devise and use strength based questions instead of personal questions presumed to predict posible "future failings". Indicative of the unlikely ability of employers to make this shift is the business world's move to out-sourcing their personell officer functions and responsibilities to agencies that are incapable of correlating the competences of the applicants to the needs of the position sought.
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my former roomate was denied a job at a portland area office automation company because his credit report stated that he had failed to pay child support. This was completely inaccurate he had paid all support on time and had documents to that fact. The company would not accept these documents and said that he needed to contact the credit reporting company(Exper**n) and have his credit report corrected. The credit reporting company told him that he needed to contact that state to have them submit a correction. And so the circle is complete and no one is responsible for what is in your credit report.
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I commonly view credit reports as a part of my job. I can say first that all the reports I see contain a birthdate as part of the identifying information. I also see the number of errors in reports. Any tool that is routinely inaccurate should not be used to screen potential employees. Further, until qualitative research has been done that shows a distinct correlation between information shown on a credit report and job performance, including tendency toward fraud or other criminal behavior, credit reports should not be used as a screening tool. Employers perceive a validity to the tool that in fact does not exist.
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I work in Human Resources and have dealt with credit checks for various employers. Most larger companies have HR staff with enough resources to follow FCRA rules (i.e. separate page(s) than application for authorizing credit and/or background checks; candidate notification and delivery of report copy(ies) if adverse action is taken due to the report(s), etc.)
Small companies often do not have enough personnel to allow keeping up new rules (and these rules were instituted in 2000) - most have old applications with incorrect authorizations.
How, in this employment environment, would an applicant dare to tell the employer that the application/authorization is improper and refuse to complete it as is? Who wants to hire a know-it-all? Hopefully the employer representative would take the input and correct the forms/process. Even if an enlightened employee applied this constructive criticism, I doubt the applicant would be hired... especially with 5 other qualified people available...
Also, many (even larger companies) ask for all of the forms before iterviewing. If not all forms are returned, an interview is not offered (often because the applicant "can't follow instructions" or "did not attend to details" as expected.
And finally, if one discusses a health issue that caused past (or current) payment issues, the health issue will throw up red flags in most cases EVEN THOUGH IT IS NOT SUPPOSED TO BE USED IN THE HIRING DECISIONS. (We're human, it is hard to "ignore" information once we know it.) So much for explaining away an issue......
I hope this new law is passed - I also hope it is not as complex as the FCRA and is simpler to follow and implement
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"And finally, if one discusses a health issue that caused past (or current) payment issues, the health issue will throw up red flags in most cases EVEN THOUGH IT IS NOT SUPPOSED TO BE USED IN THE HIRING DECISIONS. (We're human, it is hard to "ignore" information once we know it.) So much for explaining away an issue......"
Excellent point...that is about as useful as a judge saying "The jury will disregard...(something)"
How DO you un-ring a bell?
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If you have poor credit how can you get a job to pay off the collectors.
It is creating more stress in an already very stressful time.
To me is like black listing a person.
America has been know for being able to pull yourself up from your bootstraps. Working hard and you can make it.
My credit situation makes it dificult for me to get out of my situation. I have my degree ($60,000). My daughter was born just after I turned 18. No family support. 2 ex husbands. I didn't qualify for supportive programs because I had my diploma, didn't do drugs and was not a victim of domestic violence. I am normally work 2 jobs. Lately I can't seem to find a second job. The internet applications ask you to submit to a credit check for even PT positions in grocery stores. They don't offer you a place to explain. Even if you could, you have only seconds to grab the employer's attention. I need a second job so that I can climb my way out of debt.
Bankruptcy's are expensive. Collectors are not fair. Often times they list the same thing several different times. You may pay it and then they put it on again and you have to fight to get it off.
What looks better bankruptcy or bad credit?
What about the single moms and the ones that have kids with disabilities. Often we put our kids needs first and our careers may suffer leaving our credit to suffer as well.
Will I be able to recover? Or will the poor keep getting poorer and the rich richer.
I'm too qualified for a low paying job but not credit worthy of the most basic jobs. What do you suggest I do?
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Of all the arguments for the bill, I find disturbing, the lack of any comment about still allowing credit checks on a subset of potential employees. If the checks are potentially harmful or negative in any way for one group, how does that not also apply to everyone? The article suggests that the proposed law will not cover those "applying to work in a bank or law enforcement", such that they "would still be subject to a credit check, but retail, food service and many other types of employers would be restricted from considering an applicant's credit history." If the credit worthiness of an individual is not valid or could potentially improperly prevent a worthwhile individual from getting a job, then that is true irrespective of the role for which they are applying. How is the credit worthiness any more valid for the persons applying as police officers or bank tellers, than for the persons running the registers in a retail store?
If such a law is being contemplated, the lawmakers should be doing the correct thing, and make the rules apply equally to all employers doing hiring and apply equally to all applicants irrespective of the job or job title.
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I think that credit history check is a very important in employment process. Because of world wide crisis it is really hard to find any sort of a job nowadays. It would be really unfair if people with bad credit (actually those ones who have started this economical recession) will steal your job place too. It would be twice unfair so it don't have to be like that. I remember searching a job in one Illinois loan lenders company and was declined because one guy who actually had bad credit balance applied for it. I felt really annoyed with such a situation. Let's hope that soon everything will change. Thanks for the great article by the way.
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Comments are now closed.
Thanks TOL, for taking on this topic! This is one of the BEST bills this state could ever come up with & i really do hope it passes!
Employer's "excuses" that it's nessesary to screen applicant's credit histories in order to cut down on [potential] thievery is complete BULLOCKS! There's NO correlation what so ever between thievery & bad credit. If that were the case, then why is it every time i hear a news report of someone (account, bookeeper, etc.) who ripped off a company for hundreds of thousands of dollars over years, it's always some middle-aged to older woman with no criminal history & was ever viewed as "financially suspect"?
Thing is, i'm convinced that this whole concept of a person's "credit history" is a fraud that's inevitably stacked against individuals. Credit ratings don't seem to move at all if you pay your bills on time always. But if you're late paying just once, or incure even a small amount of debt, your ratings sudden drop! If you PAY OFF a debt, it's somehow not reflected on your report. If someone steals your identity, that can wreck havoc on your credit & often takes YEARS to clear up!
I'm certainly no thief, i've never stolen from an employer, & i've never been arrested for thievery. Yet, the single main reason for my [less than stellar] credit is due to a parent using my name to get a utility cut back on. I didn't even find out about this until the utility was defaulted upon & it's taken me several years to get that mark off my report!