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Death of the Credit History Check In Hiring

Death of the Credit History Check In Hiring

Eve Tahmincioglu | CareerDiva.net

December 16, 2010

There’s a growing backlash against credit history background checks in the hiring process.

At the head of the movement is Jacqueline Berrien, the chair of the Equal Employment Opportunity Commission. According to labor experts I’ve been talking to in the months since she got the top post at the government agency in April, she doesn’t much like credit checks and has the practice in her crosshairs.

Yesterday, at a hearing to discuss the practice, she made her opinion pretty clear:

“High unemployment has forced an increasing number of people to enter or re-enter the job market. As a result, an ever increasing number of job applicants and workers are being exposed to employment screening tools, such as credit checks, that could unfairly exclude them from job opportunities.”

While checking an applicant’s financial history was standard practice when it came to jobs in banking, for example, hiring managers in many industries now see credit checks as a way to find out more about the people they are considering hiring.

The issue for many worker advocates is the practice hits minorities and the jobless more than others and that’s not fair.

They create a “Catch-22″ for job applicants,” said Chi Chi Wu of the National Consumer Law Center, as they face a nearly 10 percent U.S. jobless rate and a swelling of foreclosures. Clearly, many job seekers in the thick of this financial mess are seeing their credit reports suffering as a result.

It may also be illegal when it comes to minorities feeling more of a sting.

Civil rights advocates at the meeting talked about how “the use of credit histories in the employment context can have a disparate impact on a range of protected groups, including people of color, women, and people with disabilities.”

For businesses, however, it’s become an important tool.

Christine Walters with the Society for Human Resource Management provided testimony in defense of the practice, stressing that only 13 percent of organizations conduct credit checks on all job candidates, according the the group’s research.

She also said, “while credit histories are but one piece of the puzzle used by HR professionals in evaluating job candidates, the information can be useful in determining whether a candidate has the skills and decision-making qualities for a particular job. It can also help a potential employer assess whether the individual is qualified to handle money. In addition, at a time when financial pressures on households are increasing, employee theft is on the rise resulting in major financial problem for companies.”

So basically she’s saying the unemployed might be more apt to steal from the company’s cookie jar. Do you buy that?

But in the end, Walters may have provided the agency with the best reason not to use such financial background checks:

“We believe that employment decisions should be made on the basis of an individual’s qualifications – such as education, training, professional experience, demonstrated competence – and not on factors that have no bearing on one’s ability to perform job-related duties.”

This article was originally published on CareerDiva.net.com.


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