Are Credit Checks for Job Applicants Unfair? Racist?

Originally posted by chissler
I would strongly disagree that this is a "Racial" issue. Frankly, if this woman happened to of been white with a bad credit report, I am sure she would of been turned down for the job as well. I believe this to be an issue with "Prejudice". The judgment on behalf of the employer is uncalled for and can not be substantiated. It's been quite some time since money fell out of the sky, and in one day, any security we may have with our bank account can be turned upside down. Freak accident, robbery, etc., could all leave us scrounging for money. These desperate times would leave our credit report in shambles.

I fail to see why any employer would request to see our credit reports. I am in my early twenties and have below average credit, should I be turned down for a job based on these credentials? I have a tough time accepting that. Too often in our society we are judging others on everything but their own merit.

How does our credit report determine what type of employee we would be?

I don't consider our credit report to be an indication of anything. It is one measurement of how we are with funds. If I had three small children at home and spent every waking hour and dollar on assuring them the proper care and treatment, would that affect my credit report? Not the slightest. But when I miss a few phone payments due to the fact my young child needed new diapers and food, none of the extenuating circumstances are taken into account.

I agree not a racism issue but I also believe it is totally acceptable for a potential employer to pull a credit check on their employees when the job dictates the need.

A credit check was a small part of the background for my job but at the time my 1 year old had been through about 4 surgeries and even with insurance I didn't have the $20k copays that were my responsibility. So on paper my credit shows $20k of either collections or unpaid balances. While I was somewhat worried a little explaining was all it took.

However if I had repo'd cars and a bunch of closed accounts and no reasonable explanation of such (ie job loss, family medical issues, etc) I could see an employer saying no thanks.

It all depends on the job and what kind of work they are expecting out of the employee. If they are going to be handling large amounts of $$'s or in a position where other peoples lives are potentially in the balance then a credit check is one of many appropriate tools to determine someone's overall responsibility.

An employees credit history is not just relevant if they are handling finances, but it can be indicative of their character. While it is true that even the most responsible and prudent people can get bad credit if they fall into bad luck, generally speaking most people do not get bad credit through no fault of their own.

If somebody has tons of debt, it can be a sign they are irresponsible, immature, lack intelligence or feel entitled to things they cannot afford. Someone who cannot pay bills on time is someone who is also likely not to show up to work on time or complete assignments on time. Someone who feels they need fancy clothes, gadgets, and cars they cannot afford is likely to be someone who feels they should get a raise or promotion they do not deserve. Somebody that allowed the credit card companies to "prey" on them by running up a bunch of credit card debt in college is someone who lacks critical thinking skills and common sense.

So why do we impose these judgements on real people and not Corporations?

As Corporations are legally allowed to funtion as 'Persons' then shouldn't people be able to check a Corporations credit history and make decisions on whether to deal with them?

Should not Corporations with a poor credit history be held accountable?

Should not Corporations be told not to engage in business until such time as their credit improves?

Or ... shouldn't Corporation entering in banckruptcy also force their Cheif Officers into the exact same position as it is always the decisions of the Chief Officers that place Corporations in jeopardy?

Too much debt can cause the loss of security clearance. Bankruptcy will definitely cause the loss of a security clearance. The only time my employers have run a credit check on me was part of my background check for security clearance. There are many jobs that require security clearances now days and the employers do not want “secrets” ending up in the wrong hands. Having a poor credit history can make a person a security risk.
Many financial institutions no longer require a person to be bonded (an expense that came out of your own pocket) but will perform a background check that includes credit history. People with poor credit histories are considered security risks when it comes to secrets and money. It’s a burden placed on the honest due to the actions of the dishonest.

Isn't part of the inequality in this related to the fact that you can't really compare the entire finances of a single individual to a single job function at an entire company?

In other words, why should a person's handling of their personal finances be brought to bear on whether or not they can perform a single function, even involving money, at a company? Especially when there are other people, and likely accountants and systems, to keep everything in balance anyway?

I'll bet that in most cases, it wasn't cause the person in question couldn't perform the necessary mathmatics. It was probably cause of life circumstance. They can still perform just as well as any other person in the same job.

I'm pretty much with you on this Chissler. It ain't right, and it did not used to be done that way. But it's not racist, usually. I hope.

Edit: double post

[edit on 14-1-2007 by TrueAmerican]

I don't think it was racist. I don't even think it was prejudiced. For jobs in the financial sector, you need clean credit. If you don't have it, consider another career, or get another job, make a few sizable payments, and re-apply.

OTOH, the article says she had already worked there five months. She had plenty of time to steal, if that had been her plan.

Originally posted by southern_cross3
These people that cry "racist" every time life is unfair to them make their own race look bad each and every time.

To be fair, it seems that the woman's initial allegation was only one of prejudice. The thrust of the article itself (not sure if you read it) only presents three quotes from people actually involved, two from Lisa Bailey and one from her lawyer.

“One of the human-resources people told me to come to her office, closed the door and (said): ‘We cannot offer you a position, because your credit history is bad,’ ” said Bailey, a 41-year-old Dorchester woman.
...
But Bailey opposes checking job applicants’ credit histories because “that doesn’t tell you what kind of worker the person is - just what their hardships have been.”

From the lawyer...

“Our position is that there’s no evidence that (credit histories) are useful criteria for hiring decisions,” lawyer Piper Hoffman said, adding that U.S. law prohibits any practice that hurts minority workers more than whites.

Ms. Bailey, the black woman you claim is bringing down the entire race, never once mentions the dreaded "r-word" in the article. Her lawyer did... supposedly. Remember, the reporter didn't provide a quote for the comment about race. He paraphrased it.

I would hazard the guess that this whole racism thing was added on by her lawyers, a la:"The car accident totalled my car, but thank God I'm okay." "Yes, you are, but what about your 'pain and suffering'? Don't you think you deserve some compensation for that?"

Originally posted by TrueAmerican
Isn't part of the inequality in this related to the fact that you can't really compare the entire finances of a single individual to a single job function at an entire company?

In other words, why should a person's handling of their personal finances be brought to bear on whether or not they can perform a single function, even involving money, at a company? Especially when there are other people, and likely accountants and systems, to keep everything in balance anyway?

A person's credit history can give you insight into their character. While it is true that prudent, responsible, and intelligent people can sometimes pick up blemishes to their credit record through no fault of their own or sheer misfortune, many people with bad credit histories have brought poor credit on themselves through poor judgment, lack of responsibility, and other qualities one would not want in an employee.

A credit history says just as much about a person as their criminal history. There are people with criminal records that may make great employees, and there are even more people with criminal records an employer would not want to have anything to do with. Like a criminal record, an employer may want to examine a credit record and discuss any blemishes on their record with any potential employees. Employers should be able to use their judgment to determine whether blemishes in either record should be an impediment to employment. An employer may be able to overlook a single crime commited many years ago, but not overlook several recently committed crimes. Similarly, an employer may be able to overlook a single blemish on a credit record that can easily be explained by a prospective employee, but not overlook several blemishes on a credit record that are indicative of impropper behavior.

It all boils down to, do you want someone handling your money that doesn't know how to handle money? The only people that cry about this are people with bad credit.
Credit cards are poison anyway. I threw my last credit card out 15 years ago. I have no use for them. Why spend what you don't have? Doesn't make sense to me. There was a time when we never had credit cards and lived happily. Who wants to be in debt anyway?

[edit on 14-1-2007 by rocknroll]

Originally posted by 2stepsfromtop
So why do we impose these judgements on real people and not Corporations?

As Corporations are legally allowed to funtion as 'Persons' then shouldn't people be able to check a Corporations credit history and make decisions on whether to deal with them?

Should not Corporations with a poor credit history be held accountable?

Should not Corporations be told not to engage in business until such time as their credit improves?

Or ... shouldn't Corporation entering in banckruptcy also force their Cheif Officers into the exact same position as it is always the decisions of the Chief Officers that place Corporations in jeopardy?

Corporations are subject to credit review. Standard and Poors, for example, rates corporate bond AAA, AA, A, BBB, BB, B, CCC, CC, C, D. This affects the interest rates that businesses are charged to borrow funds.

BTW, it is very difficult to get a AAA rating. Not even Microsoft or Wal-Mart rated one in 2005:

As of 2005, there are only 8 companies rated AAA by all three major credit agencies:

Automatic Data Processing
Berkshire Hathaway
ExxonMobil
General Electric
Johnson & Johnson
Pfizer
Toyota Motor Corporation
United Parcel Service

en.wikipedia.org...

Originally posted by HarlemHottie
OTOH, the article says she had already worked there five months. She had plenty of time to steal, if that had been her plan.

Once again, the article doesn't give all the relevant details.

She had worked there as a temp for 5 months, and was applying for a permanent position. The new position would have put her in charge of a large sum of funds; the temp position did not.

Ms. Bailey, the black woman you claim is bringing down the entire race, never once mentions the dreaded "r-word" in the article. Her lawyer did... supposedly. Remember, the reporter didn't provide a quote for the comment about race. He paraphrased it.

I would hazard the guess that this whole racism thing was added on by her lawyers, a la:"The car accident totalled my car, but thank God I'm okay." "Yes, you are, but what about your 'pain and suffering'? Don't you think you deserve some compensation for that?"

I have no doubt that is true.

Originally posted by jsobecky

Originally posted by 2stepsfromtop
So why do we impose these judgements on real people and not Corporations?

As Corporations are legally allowed to funtion as 'Persons' then shouldn't people be able to check a Corporations credit history and make decisions on whether to deal with them?

Should not Corporations with a poor credit history be held accountable?

Should not Corporations be told not to engage in business until such time as their credit improves?

Or ... shouldn't Corporation entering in banckruptcy also force their Cheif Officers into the exact same position as it is always the decisions of the Chief Officers that place Corporations in jeopardy?

Corporations are subject to credit review. Standard and Poors, for example, rates corporate bond AAA, AA, A, BBB, BB, B, CCC, CC, C, D. This affects the interest rates that businesses are charged to borrow funds.

But does not hold corporations to the same Standard as living people
The common company does not have access to this information either, and I have worked for a few small companies that had to wait for months to get a payment out of some companies like Carmax. If I could have affected their credit rating or forced them into court to pay I certainly would have.

If people are held out of the Job market because of poor credit, then why are companies like Delta Airlines allowed to declare bankruptcy and keep on working while forcing give-backs from their employees. Why not say "You're bankrupt and may no longer do business until you have paid all your debts".

Corporations are held to a separate, not equal, standard that allows them to get away with poor financial jugement.

They are not fined, persecuted or discriminated against and their Corporate Officers are NOT held accountable, despite Sarbanes-Oxley.

Excellent points, 2steps!

You have voted 2stepsfromtop for the Way Above Top Secret award. You have one more vote left for this month.

Does good credit or bad credit reflect on someones basic honesty? I mean come on...either you as the employer think the person is honest enough to avoid temptation or you don't. Credit rating used as a criteria for hiring? To me it makes little or no sense. Criminal history, sure. Transportation to work, ok. Grooming, ok. Credit history? Not so sure about that.

Originally posted by seagull
Does good credit or bad credit reflect on someones basic honesty?

No, but bad credit might very well reflect the ability to handle "finances".
Which is the type of job this woman was applying for.....finances.

The posts about corporations being held to a different standard than people are not accurate. The relationship between a corporation and its creditors in a bankruptcy case is not analogous to the relationship between an employer and employee.

The most propper analogy to compare the employer-employee relationship would be the relationship between a corporation and its customers. In the employer-employee relationship, the employer can decide whether to compensate the employee for the employee's services based on the employee's credit history. A corporation's customers may decide to base its decision on whether to purchase goods or services from a corporation based on the corporations financial statements, which are a matter of public record in the case of public corporations. A customer may not wish to enter a long term business relationship with a corporation with a shaky finances. Therefore, corporations in this regard are being held to the same standard as people.

rocknroll.

I see what you are saying. However, in some cases a poor credit rating reflects something other than irresponsibility...it reflects bad things happening in a persons life. Things that have priority over paying a credit card bill at that moment.