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Career Q&A | By Rex Huppke, Chicago Tribune

Credit rating catch-22 snares job hunters

Q: After four phone interviews, two in-person interviews, a drug test and a background check, I received a good job offer, pending a credit check. And, of course, after being unemployed for 18 months and going from $5,000 a month salary, to $1,200 a month unemployment, my credit is a mess. The job offer was rescinded. Any advice to get over this final hurdle, before I lose my mind?

A: In the early 1980s, there was an Atari video game called "Pitfall!" You had to guide Pitfall Harry through a jungle that included an array of pits, quicksand and scorpions.

It seems today's job seekers are like Pitfall Harry, constantly falling into traps that keep them from their goals.

In last week's column I wrote about companies that post jobs saying "unemployed need not apply." And now we look at the credit checks that are, in many cases, keeping perfectly qualified people from getting jobs.

In May, National Consumer Law Center attorney Chi Chi Wu testified before Congress on this very issue, saying: "Using credit history, especially in an economy with such massive numbers of job losses such as the current one, creates a grotesque conundrum. Simply put, a worker who loses her job is likely to fall behind on paying her bills due to lack of income. With the increasing use of credit reports, this worker now finds herself shut out of the job market because she's behind on her bills."

Thus we have what Wu calls "a bizarre catch-22." She told me that a number of states — including Washington, Hawaii, Connecticut, Oregon and Illinois — have passed laws that regulate the use of credit reports in hiring, but the practice is going on in plenty of places.

According to a 2010 report by the Society for Human Resource Management, 13 percent of companies run credit checks on all job candidates and 47 percent run checks on selected candidates. The report said that credit checks "are seldom used as a definitive hiring criterion," but groups such as the National Consumer Law Center fear they are coming into play more often than companies might admit.

Wu said that if a person suspects a credit check cost them a job, they should make sure the company followed proper procedures. First, the company needs a job applicant's consent to run a credit check.

"Then, if the employer is going to take an adverse action against the potential employee, they have to give them a copy of the credit report" first, Wu said. "Once the decision is final, then the potential employee is entitled to a second notice, which says, 'We are taking this action on the basis of a consumer report.' "

She also suggests people obtain their annual free credit report — from AnnualCreditReport.com, a site backed by the three nationwide credit reporting companies. The job seeker can check for errors and become familiar with what potential employers might be seeing.

Dawn Rasmussen of Pathfinder Writing and Career Services in Portland, Ore., said it's important for a candidate to be open about a bad credit rating, but only once the subject is brought up by the employer.

"You should never disclose it up front," Rasmussen said. "But maybe toward the end of the interview, when they explain the process and say they're going to do a credit check. You can say, 'I'm glad you're going to do that, but I did want to explain something to you.' "

Then be honest.

"If you hide from it, it looks like you're guilty," Rasmussen said. "Indicate that you're not afraid of it and that you want to explain it. Don't blame anyone; just explain. And never, ever, ever lie."

Hopefully an employer will then have the compassion to understand that just because you have credit problems — in a country where credit problems have become prevalent — doesn't mean you're not the best person for the job.

Credit rating catch-22 snares job hunters 11/12/11 [Last modified: Saturday, November 12, 2011 3:30am]
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