Why do so many compaies do credit checks on their employees?

In My Humble Opinion
1

I just went to the paralegal service that’s helping with my bankruptcy and filed the court petition today. My credit is basically down the crapper- for about the last three years, my mom and I have been taking turns being unemployed. Job losses through no fault of our own type of thing. We did a lot of stuff like pay the rent and medical expenses on our credit cards. Up until a year ago, I was managing to keep up at least the minimum payments, but eventually I wasn’t able to do that anymore. Back in January, I made the decision to quit my job at Wal-Mart because I was having severe back pain, going to school to be a massage therapist (I just graduated, yay), and I realized that if I continued to work there, I would be effectively disabled by the time I finished school and would be unable to work as a therapist. I decided that an $8 an hour job was not worth jeopardizing my whole future for, especially since I wasn’t making enough to keep up with my credit card payments anyway.

Enough background.

I’m jobhunting, and I’m finding that a disconcerting number of prospective employers do credit checks on applicants. It seems that having good credit is a major criterion for getting a job. I was talking to my mother about this, and she told me that years ago, having bad credit was considered to be a sign of bad character. The theory was, if you weren’t responsible enough to pay your bills, you probably weren’t responsible enough to be a good worker.

But, times have changed. What with offshoring and the job market being the way it is (I really don’t buy the official statistic of 5.9% unemployment- I’d be willing to bet that it is really much higher, if I had money to bet), people losing jobs and either not being able to find new ones for sometimes several months, and or only being able to find part-time work, or, if full-time, jobs that only pay half or less of what the old job paid, a lot of people’s credit ratings are tanking because of unfortunate circumstances, and a lot of “credit repair” companies are making a mint by charging people fees to be put on a budget and pay a set amount of money to the company, which is supposed to negotiate with debtors for reduced payments and interest rates, then divvy up the payment between, then not paying their customers’ bills. Which, of course, has a negative impact on your credit rating.

It seems that as times get tougher for working people who are genuinely trying to pay their bills, more companies are running credit checks as part of the application/hiring process. I don’t have a cite for this, it’s more of an observation. As I’m filling out applications, it just seems like a higher percentage of them come with consent forms for credit checks than did when I’ve been job hunting in the past. A criminal background check, I can see, but a credit check?

I suppose that at some time in the past, bad credit might have been an indication of bad character, but the job market being what it is, I don’t think that it could be considered true anymore. I also don’t think that a person with bad credit would be more likely to be dishonest than someone with good credit.

Also, it seems to me that the logic is flawed. “Gee, Miss Asbestos, I see that your income for the past year hasn’t been sufficient to pay your bills, therefore I am not going to hire you for this job that you were hoping would provide you with enough income to pay your bills.”

2

When Ardred applied to work at Best Buy, they did a background and credit check. He was in so much debt, he filed for bankruptcy (his meeting of creditors is later this month.)

He got the job no problem.

I don’t know particularly why employers do credit checks, when it seems that a background check would do much better for them, but I’ve never seen it adversely affect a job offer.

YMMV.

3

I think the thinking goes that if you’re in financial trouble, you’re more likely to be amenable to bribery, more likely to defraud the company…

4

The justification I have heard is that if you are broke and have been for a while, you are more vulnerable to pressure to sell out trade secrets. That sounds like crap to me, but there you are.

An insurance agent told me that they don’t like to sell homowner’s insurance to people who have had a bankruptcy because usually a bankruptcy is so painful that burning one’s home to get out from under the payment looks like a good option. YMMV.

5

The justification I have heard is that if you are broke and have been for a while, you are more vulnerable to pressure to sell out trade secrets. That sounds like crap to me, but there you are.

An insurance agent told me that they don’t like to sell homeowner’s insurance to people who have had a bankruptcy because usually a bankruptcy is so painful that burning one’s home to get out from under the payment looks like a good option. YMMV.

6

Credit checks are most applicable when there is a financial aspect to the job. For example, jobs that handle cash or write checks.

Try to take your personal situation out of the picture. Divide applicants into 2 groups, bad credit and good/neutral credit. Imagine you were going to conduct a scientific experiment. On average, does it seem believable to you that the bad credit group would have more shoplifting, fraud, pilferage, etc.? Obviously there would be exceptions on both sides. But since the law doesn’t prohibit credit checks, employers use what means are available to them to improve the odds.

There might be some legal ground to protest the credit check requirement in a job with little to no financial aspect to it (say, landscaper) on the grounds that it has disparate impact on a protected class (such as a minority group). But that is the long way around in terms of your immediate need to find a job.

You may want to focus on jobs with less of a financial aspect. Also, be up front with the prospective employer. Without telling your whole life story, acknowledge that they will find issues and share the basics of your plan to fix it.

7

Well…
Most of the jobs I’m seeking are casino dealing jobs. One that I may or may not be in the hiring process for, I did explain my situation to the shift manager who very much wants to hire me- at that time, I basically hadn’t filed bankruptcy because I didn’t have the two hundred dollars for the court fee- mom got her tax refund yesterday and loaned me the money. So, I’m going to be calling him back tonight- I’m thinking that actually filing will help me.

As for jobs with less of a financial aspect, right now, they seem to come in two categories

  1. Jobs I don’t have the skills/ am not qualified for
    2)Jobs that aren’t available/company not hiring.

I have heard that Citibank is hiring for customer service, and it’s definitely not a cash-handling position, so if I don’t get hired for this job that I’m in the works for (shift boss said he’d e-mail his boss and put in a good word for me, he really does want to hire me), then I’ll go apply for the Citibank job. I figure that the worst that can happen is that I won’t pass probation because of my lack of sales ability, but then I can collect unemployment until I can go to work in a spa.

8

I always thought it was because there are two types of people: those you can trust and those you can’t. If you’re not responsible about OPM you probably won’t be responsible with the company’s assets.

Also, in some industries, it’s almost impossible to fire anyone, especially a minority. So you want to be real careful before comitting to someone you don’t know.

9

If believing that makes you feel better, great. I’ve got news for you, however. Times haven’t changed that much. I suspect that a lot of people still think that, if you aren’t responsible enough to pay your bills, you probably aren’t reponsible enough to be a good worker.

Faced with two applicants with completely equivalent job qualifications, one who has a good credit rating and the other who’s recently declared bankruptcy, I gotta tell ya’, the first one’s getting the job.

Just a couple of questions. When you declare bankruptcy, and walk away from the credit card bills you’ve amassed, who do you think has to pay off those debts? The people who provided the goods and services to you already have their money, so at least they’re not getting stuck, at least not directly. But the credit card company has to cover those losses somehow. How do you think they do that? Simple: by making more money off the rest of us, the ones who pay off our debts. So, they charge higher interest rates, charge higher yearly fees, and charge merchants a higher percentage of the amount charged.

Second, I gather that you didn’t want to hang on to your job in part, at least, because you felt it would somehow jeopardize your intended career in massage therapy. So now you’re looking for a job in a casino? Run that by me again?!

Finally, I really must applaud your plan to fall back on unemployment insurance. After all, no one else has to pay for that, either, do they? Oh wait, that’s right - once again, the rest of us are shelling out for that, through the taxes we pay.

Now, I’m sorry you seem to have had a run of bad luck. But I find it a little disturbing that you seem to be absolutely mystified about why anyone would consider your inability to get your act together any sort of character flaw.

10

Well, hmm, let’s see, I had a job that was wrecking my back, so I quit. I’m looking for a job in a casino because I have experience and know I can do the job. Also, since I’ve been, like taking care of myself (yoga, the right kind of exercise), the back is doing much better. Also, I guess you’re one of those people who can’t grok that there’s a difference being chained to a cash register and having a job that involved movement/flexing the muscles and keeping them warm like on a busy craps game.

Also, I’ve been paying into unemployment for my entire working life, and I don’t complain if someone loses their job and collects on it until they can find work in the job field that they’ve been to school for a year to train in. It’s called living in society. It’s not like I’m gong in intending to get fired, but let’s face it, shit happens.

Oh, yeah, and the fact that many companies consider it standard business practice to hire an employee and fire them just before they’re eligible for health benefits and I happened to get hired by a few of them, and the fact that some employers decide they don’t want to train them two weeks after they hired them knowing they would need training and my mother happened to get hired by a few of them should definitely be considered a character flaw on my part.

Sorry, I really have been a jerk what with the losing jobs through no fault of my own then being evil enough to get hired by an employer that absolutely refused to transfer me to another department when I developed physical problems, even though the department I was requesting to be transferred to was short-handed.

11

The casinos want to know if you are in financial trouble because if you are, you’ll steal from them.

If they hire you, this is only the beginning of hoops you will have to jump through to assure them that you’re not a thief. Stealing, fleecing and cheating is their job, y’see.

12

Also, try another experiment. Take your personal situation out of the picture. Divide applicants into two groups, those who are unemployed (hence no income) and those who are employed (but looking for work) and have income. On average, who’s more likely to have bad credit? Obviously, there would be exceptions on both sides. But it’s clearly just another way poor people get discriminated against by society.

I find it amusing that there’s no corporate practice so nauseating that someone on the Dope won’t defend it.

13

There are companies that run employee background checks that includes the credit check and criminal check. The company we use for this uses the same “package” for potential tenant checks where one would definitely want a credit history. What I learned about these is that you cannot hold the information against the applicant unless it would affect some aspect of their emploment, i.e. if someone was arrested for stealing from a previous job where they handled money and your job will require money handling or if they were arrested for drugs and your job is a veterinary clinic that has drugs someone could be tempted to steal.

I don’t pay too much attention to the credit report. Frankly, I don’t like the assumption that bad credit means someone is more likely to steal or that they were lazy or irresponsible about their bills. Sometimes crap, like illness, happens and people can’t get caught up and have to fall back on bankruptcy as a last resort.