Jessica Miller-Merrell | , , , , , , , , , , , ,| By
Financial literacy is important for college students because it can affect your life post-graduation. Credit checks by employers are up 6% over last year to 21% according to a 2011 report by EmployeeScreenIQ. No longer can college students get away with bad debt while in college. In the real world there are more obstacles to jump through when applying for jobs. First, you must get the interview. If you’re lucky enough to score a second interview and finally the offer, you get to be subject to all kinds of checks. Background checks. Reference checks. And the looming…Credit Check.
Pre-Employment Credit Checks: Is It Fair?
Most job seekers would tend to disagree with the use of a credit check as a way to determine if you’re fit for a job. There are multiple reasons your credit could be subpar aside from missing a payment here and there such as divorce, closing an account, using up to 80% of your credit line, and sometimes even renting a vehicle. So should this stop me from getting a job? I don’t think so.
I understand the motive behind the credit check. Most employers are looking for reliable candidates that won’t lie, cheat, or steal from the company, but a weak credit score doesn’t necessarily reflect the candidate. Here is a list of a few reasons why I think credit checks should be barred in all fifty states when it comes to pre-screening employees:
Weak credit reflects weak economy—not lack of responsibility.
With unemployment at one of its highest in decades those who are losing their jobs and unable to make ends meat are being effected twice as much. According to Money News there are now about 42.2 million Americans who have poor credit scores. Either by downsizing or businesses closing, people are losing their jobs at a faster rate than every before. Should we penalize these people who are put in this awful situation? I think there are better ways to determine if someone is qualified for a job.
Credit issues don’t equal a higher rate of theft.
One of the most notable reasons employers require credit checks in employment screenings is to protect the company front future embezzlement or to heed of any criminal activity. In 2010, a spokesman for TransUnion told a group of Oregon legislators “At this point we don’t have any research to show any statistical correlation between what’s in somebody’s credit report and their job performance or their likelihood to commit fraud.”
If that is the case, why do the numbers of companies put any weight into credit checks? The Society for Human Resource Management reports that only 9% of companies look at favorable credit reports as an influential part of their decision to hire someone. If only 9% find it influential, why the privacy invasion?
Other alternatives should be utilized to avoid privacy invasion.
Let’s face it. We don’t want people knowing our business. If you come into work, excel your my job, but come home to some financial trouble, you don’t want your boss, HR, or others to know about it. If you have problems at home and they stay at home why would you need to disclose? There is no evidence to suggest that bad credit scores effect performance. There are superior methods out there such as better interviewing techniques, job competencies, and personality tests.
Should You Stop Using Pre-Employment Credit Checks?
If you want to prevent theft, try working on company culture and values aside from discriminating based on credit scores. Does your company utilize credit checks as a part of pre-employment screening? Do you agree or disagree? Let us know!