Debunking Myths About Employment Credit Checks

Nick Fishman

Be still my heart.  For the second time in the last month, a member of the media has written a fair and balanced article on how employers use credit reports as part of the background screening process (see post on CNBC article).  This time, Erica Sandberg of the San Francisco chronicle writes about six misconceptions critics have about how they are used. Her timing is perfect as we reported earlier today that Maryland has joined Hawaii, Oregon, Illinois and Washington in enacting laws that severely restrict the use of credit reports.

I’ve included my four favorites here as well as my quick responses to these myths.  Of course, Erica did a much better job of explaining them and providing a better picture of what is really going on.  I strongly encourage you to read the full article.

  • Most Employers Pull All Applicant’s Reports– Not true.  See SHRM study which reveals that only 13% of employers indicated they run credit on all applicants.
  • Employers and Lenders Look for the Same Information– Not true.  Employers are not privy to a credit score or account numbers.
  • Poor Credit Will Immediately Disqualify You– Not true.  If employers only hired people with good credit, they’d hardly be able to hire anyone
  • Employers Use Credit Checks to Discriminate– Really? Does anyone actually believe this?  While Erica provides a better explanation than this, I refuse to dignify this notion with a response.
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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    I find Credit Reports are subjective tools that can be used for lots of reasons that give tons of information that can be interpreted in many ways.
    For Employment Screening it serves to verify previous employers (since some do select or omit them off of their resumes).
    Previous addresses (helpful where you folks in the US do your Criminal Checks through Counties).
    They list those who have made past Inquiries into your credit history (could be indicative of something depending on who made the inquiries and when) subjective interpretation here.
    The person’s credit rating (we have it in Canada you might not in the US) indicates their payment pattern… and like it was said… who cares, everyone has debt … but if your history indicates that you hover on the border of bankruptcy, you might want to look further if they’re applying as VP Finance.
    Why not use it as part of the interview? If you’re cleared to access it, then you’re cleared to use it and discuss it with them.
    We all seem to treat them like the golden cow that we shouldn’t have.