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Rejection over Credit Report

By Faye Mergel
Published: Sunday, September 6th, 2009

More and more companies refer to credit reports before hiring a job applicant. Although the most recent official survey will not be available until later this year, The Employers Association in Charlotte say that more companies are pulling out credit reports before deciding who to hire.

Rejection over Credit ReportIn a 2004 research by the Society for Human Resource and Management, 43 percent of companies say that they check credit reports of job applicants. That is almost double the 1998 figure of 25 percent.  Dan Wilson, executive of Asset Protection Associates, says that: “There’s a school of thought that a person who consistently does not pay their bills may not be a reliable employee, may not be able to follow directions, (and) may not be able to comply with normal day-to-day job responsibilities.”

However, Wilson says that a credit report does not necessarily reflect personality and potentials of a job applicant. He adds that checking a job applicant’s credit or financial report should only be a part of a broader background check.

Fair Credit Reporting Act (FCRA), a federal regulation, allows employers to look into records of present and potential employees. However, a company must first secure the written consent of the employee or job seeker involved before they can legally access his records.  They should also inform the person if information will be used against him and provide him a copy of that report.
Diana B. Johnston, assistant legal counsel of The U.S. Equal Employment Opportunity Commission, says that employers can check credit score if it “does not have an adverse impact or is job related and consistent with business necessity.”

If employees and job applicants feel that their rights are violated, they can file complaints with the Federal Trade Commission. However, it is difficult to prove the allegations of complainants. John Ulzheimer of says that an employer can easily say that he rejected an applicant for other reasons.

Critics say that employers should allow job seekers to explain the reason for their poor credit report, considering the economic situation of the country. Kenny Colbert, president of The Employers Association, believes that credit checks are irrelevant. He, along with other employers, believes that it might be advantageous for employers to hire job applicants who have poor credit reports because they need really steady employment.

US Representative Steve Cohen, a Democrat from Tennessee, proposed a bill that will ban the practice nationwide. As of now, employees and job seekers can only hope that their credit report will not have adverse effects on them.

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