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How Credit Checks Are Becoming Standard HR Practice

Your credit history is being evaluated in job prospects.

Your credit history is being evaluated in job prospects.

No credit? We have a problem.

That’s right: A bad credit history may prevent you from getting that job, says an article on NYTimes.com. Why does your credit history have anything to do with what kind of employee you would be?

“If you see a history of bad decision-making, you don’t want that decision-making overflowing into your organization,” said Anita Orozco in the Times article. Orozco  is the director of HR at a chemical company in New Jersey. But does it all add up?

From the NYTimes.com article:

More than 40 percent of employers use credit checks at least sometimes, according to a 2004 survey by the Society for Human Resource Management, up from 25 percent in 1998. The share has almost certainly risen today, say career counselors.

“It has been an ongoing and increasing issue,” said Mollie de Rojas, district coordinator for the local operations of the Ohio Department of Job and Family Services.

Credit counselors, worker advocates and the unemployed contend that a credit check is not always relevant to hiring decisions.

“There’s no relationship between being a personal trainer making $12 an hour” and having a good credit history, said Janet L. Newcomb, a career counselor in Huntington Beach, Calif. “People are being turned down for jobs on the basis of things that really have nothing to do with qualifications.”

The article profiles Kevin Palmer  of Orange County, Calif., who was denied a job offer after his credit was checked for a clerical job taking the complaints of home owners for a property-management company.

The law varies from state to state on the fair use of credit checks for employment, but it’s a challenging scenario for many who are in the grips of bankruptcy or have had to use their credit cards to survive while unemployed or underemployed. The article depicts a vicious cycle that seems to contradict the forces at play. As professor Matthew W. Finkin of the University of Illinois points out in the Times piece: “You can’t re-establish your credit if you can’t get a job, and you can’t get a job if you’ve got bad credit.”

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