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November 17, 2006
It's a growing trend among employers: checking your credit history before offering you a job.
Is this legal? Is it fair? And just what does you credit history have to do with how you do your job?
It makes sense to have your credit history checked if you're applying for credit. But what if you're applying for a job?
Reggie Beck of Puyallup was looking for work after becoming the victim of a foreclosure scam.
"They just about handed the job in my lap 'til they saw all this on my record," said Beck.
He was set to get an IT job when the company asked to do a credit history check. After that, Beck says, they stopped calling.
"After that, the very job that possibly could've saved us and kept us in the house, well it was gone," said Beck.
He's not alone. A Renton woman showed us the rejection letter she got after the company she applied to did a credit history check.
According to the recruitment firm, Spherion, the use of credit histories by employers increased 55 percent over the last five years.
The Brookings Institution reports 35 percent of U.S. employers were checking credit reports in 2004, compared to just 19 percent in 1996.
"I think sometimes people feel that it's an invasion of their privacy or perhaps its a violation of their rights," said Jennifer Lambert, Terra Resource Group in Seattle.
Lambert screens potential employees for local companies. More and more, they're asking her to check credit histories for character and patterns of behavior.
"One instance can be explained. People make mistakes," said Lambert. "But when there's a pattern of delinquency, and a pattern of default, that doesn't bode well for an employee being a steward of company resources."
"I can't imagine how looking at somebody's credit history is a particularly effective way of determining somebody's character," said Rick Gautschi, professor of ethics, University of Washington business school.
Gautschi cites the example of a fictional young woman.
"She has a couple of small children, her husband leaves her, she has to go to work, she's trying to find a job, maybe there's been some medical problem in the family," said Gautschi. "It turns out she doesn't have health insurance."
He says employers are using credit histories because they can't always get a read on character from a previous boss. Gautschi suggests some other techniques.
"There are tests an employer can give," said Gautschi. "Job interviews which have been around for years, are designed to get some sense of character… Every person needs to be evaluated on his or her own individual worth."
Bottom line? Job seekers should mind their credit and own up to mistakes.
An employer doesn't fault an employee for making a mistake. It's when they don't take responsibility for that mistake that they have a concern.
Employers need your permission to access your credit history and they are obligated to tell you what they find and allow you the opportunity to correct any errors.
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