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Financial Mistakes Of The Past Haunting Present Job Hunters

By Faye Mergel
Published: Monday, March 22nd, 2010

One major damage that the economic downturn did was to bring down the credit scores of many Americans. Credit scores have virtually become the universally accepted financial scoring method for consumers. It is used by lenders and other financial institutions in determining whether a loan or credit applicant gets approved or not. This is just one of the many complications that American consumers are facing due to their credit scores dropping.

Financial Mistakes Of The Past Haunting Present Job HuntersAnother complication caused by low credit scores which is challenging job hunters in the country is the growing trend among employers of doing credit report checks on job applicants. Credit reports are a record of the credit accounts and financial activities of a consumer. Credit scores are basically based on the credit reports of a consumer, the difference being that a proprietary equation has been applied to the report to generate the credit score.

The trend of using credit reports to check the employment fitness of a job applicant is partly due to the rising cases of fiduciary issues such as employee theft. Companies want to avoid the hassle of such situations and want to filter out the potentially problematic employees at the hiring phase. They believe that they can do this by looking at the credit report of an applicant. The financial information contained within, they believe, reflects the level of responsibility of the job applicant.

The problem with such a method is that many people who are now carrying bad credit reports have had their credit damaged because of circumstances that they could not control, circumstances most likely caused by the economic downturn. Even more problematic is the fact that many job applicants who are looking to rebuild their credit standing are being denied the chance to do so because they cannot secure gainful employment.

The problem is widespread and still spreading. According a survey done during late 2009, around 47% of employers were during credit report checks on applicants at the time. That is a considerable rise from the figures of 2006 which was at 42%. Interestingly, in 1998, only 25% of employers would do credit report checks on their applicants. The survey was applied to 430-plus organizations and done by Society for Human Resource management.

Most of the employers who do credit report checks on job applicants usually run businesses or are offering positions which include financial responsibilities such as accounting positions, budgeting positions and other positions which involve cash or handle confidential financial information such as credit card information.

If a company wants to do a credit report check on an applicant, the applicant is usually asked to sign a waiver. According to career counselors, not signing a waiver is most likely a deal breaker for applicants. Employers usually do not do credit report checks unless the applicant is already among a group of finalists for the position.

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