Bad Check
Receiving a contingent job offer is cause for celebration. But what happens if the company retracts the offer after checking your credit? It’s a scenario that happens every day.
Susan Shin, legal director for the New Economy Project in New York, says that the credit checks sometimes don’t even stop there. “Employers are also running these credit check on their current employees,” Shin says. “So it’s not just job applicants, but also their current employees who are suffering from this.”
Unfortunately, there’s not much evidence to support credit checks’ effectiveness in providing accurate information regarding character and judgment.
“There’s an assumption that if you have certain things in your credit report, then that says something bad about you, but there’s no evidence to actually suggest that,” says Jeremy Bernerth, associate professor of management, San Diego State University, who co-authored a 2011 empirical study investigating the topic.
In the study, the researchers had about 200 people fill out a personality survey, ran their credit score, and then had their boss fill out a performance evaluation on them. “The credit score was not related to counterproductive or deviant aspects of performance,” Bernerth says.
The practice raises many privacy concerns.
“Why should a person have to share with an employer that he or she may have had some serious medical issues? Or that they had to file for divorce? Or that they have a lot of student loans? Sharing that level of personal info veers into areas that employers already cannot ask about under a lot of human rights discrimination laws,” Shin says.
To check your own credit, you can request a free credit report from each of the major national credit agencies once every 12 months; visit annualcreditreport.com to request a report. You can request an additional free report if you are denied a job because of bad credit or if you are unemployed and intend to apply for employment within 60 days of the request.
Shin notes the practice may actually hurt employers by causing them to lose out on good applicants and employees. Bernerth agrees.
“What we do know is that there are other options that show extremely high validity in predicting who’s going to be successful in a job, or who’s not going to be stealing from the company,” Bernerth says. These include tried-and-true tools like IQ tests, structured interviews and biographical data.
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