Should a Prospective Employer Be Able to Check Your Credit Score?

One of the issues that has received a lot of attention lately is that of employers checking the credit of job applicants.

Supposedly, an employer can only look at your credit report — and only a version that is meant for employers to see.

Employers are supposed to get your permission before checking your credit report, and they are expected to stay away from your credit score.  (There are some anecdotes involving employers who check credit scores, but credit bureaus claim they don’t knowingly give scores out to employers.)  Many people are upset that employers are asking to see your credit report, while others contend that it is a necessity for some jobs.

What happens if employers start checking credit scores?

Do You Want to be Reduced to a Number?

While you can deny your permission for a potential employer to check your credit report, there are concerns that you might not get the job if an employer thinks you have something unsavory to hide.  Even so, when an employer has to look at an entire credit report, he or she must see the whole history — and possibly even see a statement you might have included about mitigating circumstances related to negative items on your credit report.

If prospective employers were to look at your credit score, any nuance would be gone.  Suddenly, you could be dismissed from consideration for work in the same way that some lenders deny you a loan due to your credit score.  Some employers might still consider you, even with a less than perfect credit score, but your score could negatively influence an employer’s opinion of you.

Shouldn’t Some Jobs Require Good Credit?

Credit Score RangesOn the other hand, some contend that there are jobs where good credit is a must.

A credit score would help employers see, at a glance, who is most likely to fit the proper criteria.  It’s much faster than going through an entire credit report; all it takes is a quick look.  Some of the jobs that might warrant a credit score check include:

  • Security position: If you are going to be a security guard, a low credit score may indicate money problems. Employers might worry that you will be vulnerable to bribes.
  • Position handling money: It might be appropriate for those who are in positions of trust with money to be subject to a credit score check.  After all, if your low credit score is an indication of money problems, employers might worry that you could be tempted to embezzle.
  • Knowledge of propriety information: Those with access to sensitive or proprietary information might be in a compromising situation, and employers could worry that they might sell secrets to get out of money trouble.

What About Those without Extensive Credit Histories?

With a credit report check, employers can see what has happened for someone without an extensive credit history.  However, a credit score many not reflect the responsible habits of someone without much of a credit history.  This means that someone might be passed over just because they haven’t been using very much credit.

And, for someone who is scrupulously responsible with money, that can be quite unfair.

What do you think? Should credit scores be part of the hiring process?

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Published or updated June 15, 2014.

Comments

  1. Lack of credit may not be all that revealing when someone is just starting out in life but can say a lot about the level of responsibility and what that person might bring to an employer. The employer should be allowed to obtain credit and character references but should let the applicant know that checking credit will be a part of the process. Then the applicant can explain any anomalies.

    • I certainly agree that an applicant should know about a credit check and have an opportunity to talk about what their score is. They should also get a copy of their scores if they are pulled.

  2. I’m not keen on it. In Europe, only lenders can pull credit scores and they have nearly no identity fraud compared to here.

    New rules about licensing for mortgage lenders are requiring us to have our credit pulled. Somehow I don’t think lenders were making bad loans because they needed to fix their credit situations. I think they were doing it because it was a perfectly legal (but very unethical and unsustainable) way to make lots of money fast.

    • Hmm, wonder if the thought process is such that a lender who is knee-deep in debt might have an incentive to give bad loans for the commissions?

  3. Graham Lutz says:

    Of course they should be allowed to check your credit score! They are the ones who are going to be paying you, so if they want to check you out, they should be allowed to do that.

    If you don’t like that, maybe this isn’t the right work environment for you!

    • Well, if any employer could do that then what is the right work environment? Do you think any employer has a need to check a credit score?

  4. Track Your Bucks says:

    Employers should be able to check credit scores only if prospective employees can check the credit scores of those who interview them. What’s good for the goose, etc. All of us have been affected by the corporate shenanigans that have taken place in recent years in the housing and banking industries. Moral lapses led to these financial debacles, so a two-sided process for checking an employer’s background should be in place just as it is for employees. The only way this two-sided credit-checking process should be waived is when a prospective employer decides it isn’t necessary on their end.

    Let’s face it: in most cases, a credit check won’t show an employer how worthwhile an employee will be. It’s an invasion of personal privacy which was never part of the hiring process not so very long ago. So it should become a two-way street.

    • Interesting thoughts.

      For many companies you can check their credit rating.

      I do agree that a credit check may not show much for many jobs. For some though, perhaps there is some merit?

    • Agreed. I don’t think a credit report has anything to do with work ethic, especially if you just made some bad decisions and are cleaning things up. Stockbrokers and money managers always say ‘past performance is not indicative of future results’ and that should go for employers checking credit reports as well.

  5. As an employer I would want it. But for consumers and our personal liberties, I think your credit score should be far more private. Not to mention that most people’s reports have errors, thus potentially negatively affecting your score. If an employer wants to hire me, then they can ask me to check it. Once they have my permission then they can move forward. But I don’t think they should be able to just check your score if they want to.

    • There’s a big problem with credit scores – possible errors and no one uniformity among scores.

      As an employer it gives you one more piece of the puzzle in figuring out who that person in front of you is. Though as the employee, your personal life takes a more prominent role.

  6. Now imagine that the candidate had to borrow a lot of money for medical expenses, so the person has a huge debt and her credit score is a disaster. Or maybe the money was to pay a lawyer for her divorce. What then, should the candidate have to explain her past medical condition? Her marital issues? Give her a break, she’s applying to a job, not trying to marry the company. Besides, in the three paragraphs of jobs detailed in the article, it’s all about what “might” happen if. Do we want to go there? Next thing will be the police checking on any citizen for what the person “might” do, that reminds me of a movie I saw recently with Tom Cruise.

    • In the case of medical expenses, if an employer is going to be paying for your benefits do you think they have a right to know about your history?

      And just because you have debt it doesn’t mean your credit score will be bad. Non-payments, or late payments would be more detrimental, I would think?

      But I do see your point. A divorce or medical procedure doesn’t tell anything about how a person will perform with a company.

  7. As a former CFO, I think all of my financial staff would have a background/credit check. All executives who had budget responsibility/authority should also be included. If you handle cash, they too should be included too.

    • I think I can see the logic in having those with access to cash having their credit checked and wanting those people to have better credit records.

  8. You are correct, those that have responsibly chosen to live debt free would be unfairly harmed by potential employers using a credit score to filter the candidate pool.

  9. I think so. If banks wouldn’t trust you with borrowed money, why should an employer trust you with to run/work inside their business?

    • There’s not always a direct relationship between how you deal with your money and what you do at work. Not all jobs have to do with administering money. Whereas there is a direct relation between receiving money, what the bank lends you, and giving it back, debt payoff. Maybe the employer would also be interested in how you treat your parents, your kids, your neighbours, how you treated your teachers… that’ll let the employer know how you will deal with colleagues, bosses, customers, suppliers…

      We can try to give the employer as much information on the prospect employee as possible…ok, but as someone proposed above, I’d like to have this information too on the people I would be working with. It’s only fair. Would the employer be willing to reciprocate? And don’t get me wrong, I have nothing to hide and a very good professional reputation. But what I do at home and how I manage my finances is none of my employer’s business, unless there is a direct, scientifically proved relationship.

    • I’ve thought about the case where if you are going to handle a million dollar account for a company (not necessarily money, could be billing and such), shouldn’t you be able to pay your electric bill on time (could be any bill, just saying)?

      The question for employers is such that, if you can’t handle your own monthly bills, can you be expected to keep up with all of the paperwork of a big client?

      This would make for an interesting study. Ask employers who their best employers are and then as the employers if they can have their scores checked.

      If anyone knows of research like this?

  10. I think employers should only be able to pull credit reports for prospective employees that would handle financial business for the organization.

    I think that’s the law here in California.

  11. Jayson Quilantan says:

    The FICO score is a proprietary formula… only the credit score agencies know all the ins-and-outs of the formula!

    With such an important number dictating what happens in our lives nowadays, why isn’t the formula PUBLIC? All we get is how items are weighted in the score but nothing definite…

    Has anyone met someone with an 850? What kind of job do they hold? It is so easy (too easy?) to ruin one’s credit due to circumstances outside of one’s control, such as transportation and health problems etc. Too, the items linger unnecessarily on credit reports when the issue has long since been resolved!

  12. I think it is sad that they check credit. I understand the concept but what about a person that has had a series of bad luck situations. ie lost a job due to a layoff, spouse has serious medical condition somethings are just not planned. It is a bad enough economy with out kicking people who are already down on their luck. Some situations may not be due to bad decision making.

  13. Cbartholomew says:

    This is something that makes me very angry because it is very wrong.
    Americans are too easy to give up their privacy here in America anymore.
    Europe has better standards for this but here in America it’s no holds barred pry on who you want.

    Employers credit invading a law abiding American citizen for a job takes away their pride dignity, and bargaining power not to mention their rights and liberty.
    .
    Where is our promise of life liberty and the pursuit of happiness anymore?
    The practice of treating honest American citizens like criminals is ridiculous and un-American. An employer has no business knowing things that intimate about a law abiding citizen. It gives the employer too much to hold over a persons head and removes their bargaining advantage to negotiate the persons income even if they have AAA credit, that personal file gives up so much more.

    A credit reports tell a persons worth, a persons habits, a persons history where they have lived and with whom and so many private things that an employer has no business knowing like medical procedures and other things that can be embarrassing for a family and so much more and it gives them an unfair advantage.

    To me when an employer asks for credit information I lose all respect for that company and its owners because I’m thinking they are preying on people. They are looking for an edge to manipulate them for their financial gain. Isn’t it hard enough for the middle class to have to worry about food, shelter, retirement, social security, paying taxes, education for their children, clothing, utilities, medical and so much more without having to deal with prying employers who want to take advantage of them?

    Let’s put the shoe on the other foot. I would say that if the employer were to trade all their personal information with the perspective employee so they could see each others credit reports than it would be fairer. Don’t we all have a right to see what kind of person we are working for? This is not a one way street folks the road to an employers success is made up of his employees who never get enough credit due them anyway. I’ve seen so many employers mistreat their workers and make them feel practically worthless.

    I don’t want to work for a rip off just like they don’t want to hire a shady character. This is a major problem in America. There is no accountability for unscrupulous employers. The internet has stolen everyone’s privacy except for the wealthy elite or political hacks that can afford to seal their records. The business of what’s good for the goose and not the gander is a serious problem in this country.
    Many of you employers wonder why Americans have no pride in their work anymore. It’s because you beat them to a pulp by taking advantage of them by just promoting that they are lucky to have a job. In the world where I plan to spend eternity due to the beliefs that this country has taught me (concerning one nation under God indivisible with liberty and justice for all) well you all will answer to God for this according to the Bible that our government employees swear their oath of office to. This is not only a slap in the face to American citizens but also a degrading slur to our Constitution and Bill of Rights.

    Snooping on law abiding Americans credit reports is not fair and not relevant to hiring someone at all.

    A background check and employment check is sufficient for any employer to draw a conclusion to hire someone unless the individual has a public criminal record.

    In that case they have a right to protect their business against a known felon and that information is a public record anyway. So pull the criminal record and discuss it with the candidate. Just randomly pulling a credit reports is going too far for an employer and should be illegal. It’s only fair to allow the employer and the employee to be on a level playing field where it is fair for both parties so if you are an employer and you want to see a law abiding citizens credit report you should be prepared to let them have the option of pulling a report on you and your company as well. I can’t stress this enough.

    I understand that the employer has money to pay you to do a job for them but the employee has spent many years and lots of money to obtain their education, experience and talent and should be allowed the same courtesy as the employer.

    I have owned a business most of my life and I would absolutely never even think about prying into someone else’s private business as sacred as a credit file. I have no business in there and neither do you who think you do.

    Yes, as I indicated I can see a situation for it in the case of a felon or other criminal just to see if they are trying to turn their life around but for a law abiding American citizen it is an outrage and totally against our constitution and Bill of Rights. If we are not going to stick up for these rights then let’s just turn this nation into a Socialistic Marxist government and be done with it. That is where we are heading in case you don’t know it.

    We need to get privacy rights back for the American citizen. We have never needed it more than we need it now. Background check companies are running rapid on the internet and many of their files on people are terribly inaccurate. You can ruin people’s incomes, employment records, endanger their family member’s lives, and open them up to identity theft and many other criminal activities by allowing these companies to exist. They are irresponsible and criminals themselves because they will sell your soul to the highest bidder and for as low as $2.95 you can get info on anyone and prey on them. This is not the America we grew up in. This is a travesty of justice. I see America going down the tubes and the employers of this country are helping to promote this destruction.

    Shame on all of you!
    What we need is the select few that want to protect and take care of their employees step up to the plate and set the standards for decency and turn this huge invasion of privacy by speaking out against practices like these. If you do you will have the best employees beating a path to your door wanting to work for someone who really cares about their fellow man. I know these companies are out there and if you are one of them, take action before it’s too late to turn this all around. One thing I have learned in all my years as an employer and I have never seen anyone exempt from it. This is a fact!
    “Everything that you do will come back to you” You want respect from an employee, show them some first, you want an honest employee? Then don’t come off as a snoop before you hire them. You want an employee who will be dedicated to the company then dedicate your resources to protecting them and they will protect you, it’s a two way street and everything you do will come back to you.

    Cbartholomew

  14. C Grindele says:

    This practice should be illegal for the most part. With your help this can be accomplished with a petition I have created.

    https://petitions.whitehouse.gov/petition/illegalize-pull-credit-report-gain-employment-unless-said-employment-has-high-potential-fraud/CV4LySfJ

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