Banning Employment Credit Reports a Big Mistake

Nick Fishman

Many states are considering legislation to restrict or ban employers’ use of employment credit reports in the hiring process.  Credit reports are a valuable tool in the employment screening process and we’ve been vocal in our opposition to such legislation.  I found a great editorial piece on this issue in the Herald-Review (a downstate Illinois publication) and I could have said it better myself.  See below.

There are two reasons why this sort of legislation is a bad idea.

First, it puts more government regulations between an employee and an employer. Except in cases to ensure fair hiring practices, government should not be involved in how companies hire employees. Employers need to maintain the ability to hire people the way they want to hire. One way of screening applicants is to find out about their background, and their credit history is a part of that background. That’s a tool that should not be taken away by government.

More importantly, the pre-employment credit checks actually protect consumers. Money stolen from companies eventually is paid by the consumers.

Plus, do consumers really want to show their credit card to a cashier who has a gambling or substance abuse problem? Do consumers want to give personal information to a professional who is facing a mountain of debt and looking for some quick income? Do employees want the new local store manager to be someone who has repeatedly declared bankruptcy?

Banning credit checks is a popular idea, but few people are considering its overall impact. Businesses need to run these sorts of checks to protect themselves and the consumer.

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Nick Fishman
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Nick Fishman

Nick Fishman is the co-founder of EmployeeScreenIQ, a leading, global employment background screening provider, and serves as the company’s executive vice president and chief marketing officer. He pioneered the creation of EmployeeScreen University, the #1 educational resource on employment background checks for human resources, security and risk management professionals. A recognized industry expert, Nick is a frequent author, presenter and contributor to the news media. Nick is also a licensed private investigator in the states of Ohio and Texas.
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  • Ron Congress

    We are not owned by our employers, we work for them. I have the right to privacy and credit reports were stolen by the credit bureaus to sell to employers to make a buck. They never had the right in the first place and are breaking the law by selling information they don’t own. It’s called stealing and theft . . . get it? I’m asking to work, not borrow money! Therfore, you do not have the right to review my credit report!

  • Katrina

    You have no idea what you are talking about. Up until just the last few years, no one had access to your personal information. With Identity theft, inaccuracies, & unemployment on the rise, no one should ever touch your PRIVATE credit report except yourself & the bureaus. This is all just a bunch of propaganda to keep people down so that you can discriminate against them at the worst time in this country’s history since credit reporting began. Work & personal references, employment history, & criminal background checks are more than sufficient to determine if someone is morally ethical. Credit reports do not reflect a person’s character, their moral ethics, or worthiness towards a job. If anything, it will make them more inclined to be a harder worker so that they can get themselves out of this mess. Don’t you think if people were as dishonest as you people are trying to make them out to be, that no one would have a bad credit report? The statement made by the author of this blog are totally ignorant & biased.

    Maybe you or someone you love will end up on the unemployment line, or take on a major illness that sets you way back, or have your identity stolen. Then perhaps you’ll wake up to the fact that you are now in the same boat that is keeping the over 8 million unemployed in the unemployment line, that’s is only helping this economy to worsen by the day, & make taxes rise as more & more have to pay into the government to help families asking for public assistance. All this is doing is allowing SHRM & the lobbyists to discriminate & make their jobs easier, while making the middle class disappear, & letting the rich get richer. People are down on their luck due to no fault of their own. It was due to big banks & Wall Street that created this melt down by their lying greed. Ah, but of course, then they can use the taxpayers money to bail themselves out. Well, when all these unemployed people aren’t paying taxes anymore, then the Treasury can just keep pumping out the green on their machines, & just make the dollar absolutely & completely worthless, & America can become another 3rd world country.

    Within 6 months a student has to start paying back their loans after graduation. So now what? They went to school & are paying all that money so as to find a good job, only to be turned down now because they couldn’t get a job to start paying back the loans. This vicious circle of Catch 22 No Job=Bad Credit & Bad Credit=No Job will not stop if we the people don’t stand up for our rights. It’s in the Constitution & the Bill of Rights, backed by our forefathers, that we as Americans have the basic human right to work & give the simplicities of shelter & food to ourselves & our families. Basic human need to sustain life. All of this one sided discrimination is WRONG!!

  • Hmmm… I think credit reports are stupid, unless you write your own. With all the typing errors and identity theft going on these days I don’t trust a God damned word anything any of the reporting agencies have to say about anyone. Plus when I worked for Equifax as a temp back in the day, they were paying me more than their regular employees! I got fired because I wrote an editorial to the employees suggesting they unionize. Anyways… Fuck all the credit reporting agencies, write your own damn credit report and have whatever kind of day you want. Word out – – –

  • Mrs Z

    This is private information, and should not be a legal commodity. Credit reporting has become preditory and should be heavily regulated, and banned from making a profit!

  • JOE HILL

    Are you kidding me, I provide all my personal information to get a job, all that is needed to dis scribe my skills and abilities, now they go and check on my ability to make purchases. Ok, now they set my pay, cant they figure out they are paying me one three hundredth of the CEO. Well I just dont agree with how a credit check will help define my ability to do the job.

  • I think that there have been some extremely valid points raised by those commenting on our post. Some I agree with, some not. I disagree with those that suggest that a credit report is never valid. There are some positions and some organizations that need to evaluate that information before making a hiring decision. In these instances, both the employer and the consumer benefit from this. Let’s take for example a stock broker with access to both people’s money and personal information. Isn’t how they manage their own funds vitally important to how they would manage someone else’s?

    On the other end of the equation, there are many positions which do not and should not require a credit report and you are seeing more and more litigation arising out of such practices.

    Lastly, I strongly believe that most employers who use credit reports know how to use them, what to do with them and to ensure that there is no discrimination when evaluating them. There are certainly those out there, although I would argue a small minority, that are not using them properly. In this case, we need to educate them on how to use them properly and when it is appropriate.