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Hiring Someone with a low credit score
Recruiting & Staffing
Hiring Someone with a low credit score
Exchange ideas about sourcing, screening, interviewing, finding passive candidates, measuring your results, and more.
In this bad economy, would any of you hire someone with a low credit score if they otherwise seem perfect for the position?
Thank you in advance for your input.
Brenda
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Forums » Topic Forums » Recruiting & Staffing » Hiring Someone with a low credit score
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Hiring Someone with a low credit score
posted at 6/15/2010 3:13 PM EDT
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Posts: 1103
First: 3/16/2007 Last: 8/19/2011 |
What is your reason for even considering credit scores for this position? What kind of position?
I was once VP of HR for a National Armored Car company. We used credit checks on outr armored car drivers and cash vault employees (as well as a number of other positions). ( we also used polygraphs, integrity tests, criminal and motor vehicle background checks) We would look at credit history, debt ratio's etc. We never used credit scores and I wasn't completely comfortable with using the other data. These were in essence $12 an hour employees, relatively unskilled (although some had CDL's and were armed). The fact that they had credit problems was pretty understandable. So to directly answer your question I would not. I'd like to know more about the who what when, etc. |
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Hiring Someone with a low credit score
posted at 6/16/2010 1:21 PM EDT
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Posts: 160
First: 12/5/2002 Last: 4/26/2011 |
I think it depends on the position. Obviously someone who works with cash or access to financials should not be going through a bankruptcy or be in serious debt to avoid risks of theft or embezzlement.
Bad credit may be due to divorce or unforseen medical costs or even adjustable rate mortgages that were offered by predatory lenders. I would only use credit info as part of the picture when evaluating a candidate and maybe a very small pice of the puzzle if the position is not financial and not a high paying job. |
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Hiring Someone with a low credit score
posted at 6/17/2010 4:33 AM EDT
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Posts: 544
First: 9/27/2004 Last: 9/13/2011 |
According to the recent legislation in Oregon, there is no valid evidence that credit checks do what they claim. I don't know if that's true, it is very hard to "scientifically" prove or disprove something that never happened because it was prevented from happening.
But I think there has always been potential for discrimination and now that more and more Americans are faced with both reduced credit scores and unemployment, the practice is being questioned unless there is a job-related reason. It seems like right now, credit scores are more about what lenders are going through than the borrower's character. Why else would the rules keep changing? |
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Hiring Someone with a low credit score
posted at 7/13/2010 6:10 AM EDT
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Posts: 1
First: 7/13/2010 Last: 7/13/2010 |
I am VP of Sales for USA-FACT (www.usafact.com). We are a background check firm that provides credit reports (and other background check services) to employers nationwide. I have been in the background check industry since 1998.
Credit scores are NOT available from the credit bureaus for employment purposes. This is a common misunderstanding. Credit scores are available for lending, insurance, tenant screening and several other permissible purposes, but NOT employment. Considering a negative credit report (not score) or negative info in a credit report is common for employers. However, currently there are 3 states - OR, WA and HI - that seriously limit the legal use of credit reports in hiring. 29 other states have proposed similar legislation. The CA legislature has recently passed a similar law twice only to have it vetoed by the Governor. Any use of credit reports should be job-related and consistent with business necessity. And of course, consistency in use by position is essential. The EEOC and some states, as well as plaintiff's attorneys, are looking closely at employers use of credit reports in hiring. Workforce recently ran an article about a lawsuit brought by the EEOC against Freeman Companies relating to the use of credit (and criminal records) in hiring and its possible disparate impact on certain protected classes. We strongly recommend consulting with legal counsel regarding creating a policy for the use of credit reports in hiring. We have a free (HRCI credits avaialble) Webinar on the topic on our web site. www.usafact.com. Vince Pascarella, Esq., SPHR |
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Hiring Someone with a low credit score
posted at 7/13/2010 10:26 AM EDT
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Posts: 80
First: 11/17/2006 Last: 7/13/2010 |
A credit score isn't a measure of how worthy of credit you are, from a financial stability perspective, it's a measure of how likely a lender is to make money from you.
So, if am the most financially responsible person on the planet, purchase my home outright for cash, have one credit card with a very small line of credit, pay it off in full every month and don't even use it that much, I'm going to have a much lower score than a person who has a mortgage, has credit cards, has a high line of revolving credit, carries a balance foward each month, and uses the credit card a lot. Clearly, unless you are looking at lending that candidate money with the goal of making bucks off of the transaction, you have no reason to inquire about the credit score. |
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Hiring Someone with a low credit score
posted at 7/13/2010 11:11 AM EDT
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Posts: 12
First: 10/10/2000 Last: 6/1/2011 |
With unemployment at the current rates a potential employee has a high probability of being unemployed and having a reduced credit score as a result of that unemployment. You could miss a dedicated and thankful employee by blindly excluding them.
If you have deep pockets you could be looking at a class action from the regional unemployed. Since state and federal coffers are stretched to their limits do not look for support from that side. Especially if this selection criteria has a racial bias as a side effect. It gets more tangled if you obtain the report through a fraud. As Vince above noted there are reasons for obtaining the information but if you lie to obtain the information... and if your credit bureau reports your investigation to the individual ... Services like attorneys are suffering and looking for opportunities. Like so many hiring selection practices it needs to be apropos to the job. |
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