Companies may use credit history to determine candidacy
Kalen Ponche
Issue date: 4/7/05 Section: Indepth
When Lori Jones went in for her second interview for her job as a branch office administrator for Edward Jones, she was asked permission to do something she wasn't completely comfortable with: check her credit.
Graduating students might find themselves in a similar situation as many employers choose to run a credit check on potential employees. Under the Fair Credit Reporting Act, consumer reports can be furnished to anyone who intends to use the information for employment purposes.
Jones said the company required her to sign a waiver allowing it to check her credit to be considered for the job.
"Not everybody has perfect credit," she said. "Being told you can't have a job just because you didn't pass their credit check, that's just wrong."
Jones said she was nervous when she found out they were going to check her credit because she had declared bankruptcy in the past. A bankruptcy will appear on a credit report for 10 years, according to the Federal Trade Commission Web site.
"It did become a concern for me because I did have blemishes," she said. "Unfortunately, you do what you have to at the time. ... Either I lose my home and find somewhere else for my family to live, or I file bankruptcy and hopefully get to keep my house."
Jones said her employers told her they would consider her situation. She said she had to write a letter explaining her reasons for filing for bankruptcy and the whole situation made her nervous because she didn't want to jeopardize her potential to get a job.
"It's very nerve-wracking for the simple fact that I came here to earn a paycheck," she said. "Why do I want to jeopardize it by having them look at my credit?"
During the past 10 years, companies increasingly have been performing background and credit checks to screen potential employees, said Barry Nadell, president and co-founder of InfoLink Screening Services.
"There are various companies that it's a slam dunk that they'll do a background check," he said.
Financial companies, banks and the healthcare industry are the most likely to perform credit checks, Nadell said. All kinds of businesses large and small, however, are checking potential employees' credit.
"With small companies, it's even more important, depending on if somebody can affect a company financially, handling money, credit cards, accounting departments, merchandise," he said. "By looking at somebody's credit report, you can get a good idea of their character."
The threat of negligent hiring has caused many companies to turn to background checks, Nadell said.
"Courts have ruled [businesses] should know the employees past experiences," he said.
Companies should not jump to conclusions when encountering something negative in someone's credit report, Nadell said.
"When you see accounts that went to collections agencies, it doesn't mean that you should deny employment," he said. "It means you should ask questions."
Before an employer can check a potential employee's credit report, the potential employee must sign a waiver allowing the employer to do so, Nadell said
An employer cannot deny a job based on debt alone, Nadell said. If an employer does decide not to hire a candidate based on the information found in the report, it must provide notice of the action it is taking and a free copy of the report from the consumer reporting agency, according to the Fair Credit Reporting Act.
The average background check performed by a company like InfoLink can cost the employer between $50 and $100, depending on the amount of information and services they want, Nadell said. He said in the past 10 years he has seen an increase in the number of companies requesting background checks.
Students about to enter the job market should be prepared to have their credit checked when applying for a job, Nadell said.
"They should order a copy of their credit report from each of the bureaus, and if there's a dispute, they should take care of it now," he said.
Lesa Ketterlinus, director of the Career Center, said she has known of students who had their credit checked before they were hired after graduating. After students find out about the state of their credit, she said they could come into the Career Center.
"We in the Career Center can help them strategizing what to do if they have less than stellar credit," she said. "I certainly could help them to explain it in an interview."
An amendment to the federal Fair Credit Reporting Act allows anyone to get a copy of his or her credit report from each consumer reporting agency for free, according to the FCRA Web site. As of March 1, Missouri residents can order a copy by logging on to www.annualcreditreport.com. Starting June 1, southern states will be able to obtain a free report. Eastern states can order them beginning Sept. 1.
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Graduating students might find themselves in a similar situation as many employers choose to run a credit check on potential employees. Under the Fair Credit Reporting Act, consumer reports can be furnished to anyone who intends to use the information for employment purposes.
Jones said the company required her to sign a waiver allowing it to check her credit to be considered for the job.
"Not everybody has perfect credit," she said. "Being told you can't have a job just because you didn't pass their credit check, that's just wrong."
Jones said she was nervous when she found out they were going to check her credit because she had declared bankruptcy in the past. A bankruptcy will appear on a credit report for 10 years, according to the Federal Trade Commission Web site.
"It did become a concern for me because I did have blemishes," she said. "Unfortunately, you do what you have to at the time. ... Either I lose my home and find somewhere else for my family to live, or I file bankruptcy and hopefully get to keep my house."
Jones said her employers told her they would consider her situation. She said she had to write a letter explaining her reasons for filing for bankruptcy and the whole situation made her nervous because she didn't want to jeopardize her potential to get a job.
"It's very nerve-wracking for the simple fact that I came here to earn a paycheck," she said. "Why do I want to jeopardize it by having them look at my credit?"
During the past 10 years, companies increasingly have been performing background and credit checks to screen potential employees, said Barry Nadell, president and co-founder of InfoLink Screening Services.
"There are various companies that it's a slam dunk that they'll do a background check," he said.
Financial companies, banks and the healthcare industry are the most likely to perform credit checks, Nadell said. All kinds of businesses large and small, however, are checking potential employees' credit.
"With small companies, it's even more important, depending on if somebody can affect a company financially, handling money, credit cards, accounting departments, merchandise," he said. "By looking at somebody's credit report, you can get a good idea of their character."
The threat of negligent hiring has caused many companies to turn to background checks, Nadell said.
"Courts have ruled [businesses] should know the employees past experiences," he said.
Companies should not jump to conclusions when encountering something negative in someone's credit report, Nadell said.
"When you see accounts that went to collections agencies, it doesn't mean that you should deny employment," he said. "It means you should ask questions."
Before an employer can check a potential employee's credit report, the potential employee must sign a waiver allowing the employer to do so, Nadell said
An employer cannot deny a job based on debt alone, Nadell said. If an employer does decide not to hire a candidate based on the information found in the report, it must provide notice of the action it is taking and a free copy of the report from the consumer reporting agency, according to the Fair Credit Reporting Act.
The average background check performed by a company like InfoLink can cost the employer between $50 and $100, depending on the amount of information and services they want, Nadell said. He said in the past 10 years he has seen an increase in the number of companies requesting background checks.
Students about to enter the job market should be prepared to have their credit checked when applying for a job, Nadell said.
"They should order a copy of their credit report from each of the bureaus, and if there's a dispute, they should take care of it now," he said.
Lesa Ketterlinus, director of the Career Center, said she has known of students who had their credit checked before they were hired after graduating. After students find out about the state of their credit, she said they could come into the Career Center.
"We in the Career Center can help them strategizing what to do if they have less than stellar credit," she said. "I certainly could help them to explain it in an interview."
An amendment to the federal Fair Credit Reporting Act allows anyone to get a copy of his or her credit report from each consumer reporting agency for free, according to the FCRA Web site. As of March 1, Missouri residents can order a copy by logging on to www.annualcreditreport.com. Starting June 1, southern states will be able to obtain a free report. Eastern states can order them beginning Sept. 1.