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Bad credit can hurt job hunt

Job hunters, pay attention. Almost half of employers say they include consumer credit checks in some of their pre-employment investigations.

According to congressional testimony last month by the Society for Human Resource Management, credit checks are a useful tool to "assess the skills, abilities, work habits and integrity of potential hires."

That stance understandably grates on job hunters whose credit ratings have fallen not because they were perennial bad money managers, but because they didn't have paychecks for a long time.

According to the society, only 20 percent of employers conduct credit checks on all applicants, but those that use them think they're worthwhile insights into candidates' qualifications.

A bill in the U.S. House would amend the Fair Credit Reporting Act to ban the use of credit checks on prospective and current employees for employment purposes, with some notable exceptions.

The Equal Employment for All Act would prohibit such use of credit information except for jobs that require national security or Federal Deposit Insurance Corp. clearance, for state or local government agencies that require the use of consumer reports, or for supervisory or professional positions at financial institutions.

The Society for Human Resource Management said 57 percent of employers who do credit checks do them only after contingent offers, while 30 percent do them after job interviews. Most employers said they would look at the past four to seven years of a credit history.

The Fair Credit act already requires employers to inform applicants if a credit-related issue caused them to be rejected from consideration.

Sixty-five percent of employers in a survey by the Society for Human Resource Management said they allow job candidates to explain their credit results before the hiring decision is made. About 22 percent said they allow explanations after the hiring decision is made.

Illinois, Oregon, Hawaii and Washington have passed laws to prevent employers from using credit checks as a filter in hiring decisions.

Diane Stafford is the workplace and careers columnist at the Kansas City Star.

Bad credit can hurt job hunt 10/21/10 [Last modified: Thursday, October 21, 2010 3:55pm]

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