Half Truth About Credit Reports Doesn’t Tell the Whole Story

Nick Fishman

Employment Credit Reports

I guess we all spin the facts at times to fit our narrative.  I’m certainly guilty of it from time to time, but I like to think that I balance it by sharing opposing views.

After reading “Bad Credit Ratings Sinking Job Hunters”, posted on CBS.com, I can’t help but feel that the author is doing a disservice to both employers and those seeking employment.  The article highlights a few instances where job applicants were denied employment based on adverse information found on their employment background check; specifically negative information contained in a credit report.  Those of you that know me or follow this blog know that I am not a huge champion for employment credit reports, however there are good explanations for why and when employers use them.

Here are the two areas where I think the article was misleading:

  • The article quotes consumer advocate Amy Traub as saying that half of all employers conduct credit checks on their employees
  • The author points to a SHRM research employer usage of credit reports is 47% usage.

Both statements may be accurate, but without all the information they don’t point to the other key piece of the puzzle here:

  • Of the 47% that utilize credit reports, only 13% do so for all employees.
  • Most of those are in regulated industries where they are mandated to check credit.

These statistics suggest that employers are tailoring their background screening programs to only include credit where the job responsibility dictates doing so, but they also would have changed the complexion of the article.  And that’s where I believe the disservice comes into play.  First, it makes employers look like unbelievable tyrants.  If most or all employers denied people jobs based on bad credit, no one would be hired.  Secondly, it makes job seekers fearful that bad credit will stop them from finding work.

I don’t believe that credit reports should be conducted on all people applying for jobs, but there are some positions where the information can be helpful. For instance, would you want to invest your life savings with someone who has a history of mismanaging their own finances? Generally, employers will take into account mitigating factors of poor credit such as a divorce, health issues and even the state of the economy over the last few years. They are looking for overall trends.

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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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