Dan Denton is stuck in a vicious cycle: He’s behind on his bills after losing his job. But lousy credit is spoiling his chances of finding new employment.
Recruiters from a St. Louis-based investment company recently rescinded an offer after looking at his credit history, which has been mauled by overdue card payments and an impending foreclosure on his house. He and his wife, Dana, filed for bankruptcy protection in June to try to hang on to their home.
The credit report is becoming the latest hurdle for unemployed workers in a dismal U. S. job market. Up to one-half of employers use credit screening to weed out potentially troublesome hires, although estimates vary, and the practice is on the rise.
Money woes could signal disorder in an individual’s personal life that could translate into slipshod work habits, some staffing experts said. Companies lose billions annually to employee theft. A sterling credit history points to a worker who is more likely to be disciplined, trustworthy and reliable.
Screening employment prospects this way is legal in most of the country as long as it is disclosed to applicants, who must give permission for a credit check to be run.
But some experts said that there’s no clear link between credit history and job performance and that the reports don’t paint a complete picture, omitting details about divorces, medical bills or even identity theft.
The Society for Human Resource Management estimates that 40 percent to 50 percent of employers, including the U. S. government, now run credit checks on potential hires.
Applicants for security officer positions at the Transportation Security Administration are ineligible for employment if a credit check turns up more than $7,500 in past-due debt, delinquent taxes or late child-support payments. Existing security officers must also pass random credit checks to keep their jobs.
Most companies pull reports produced for them by one of the major credit bureaus. Federal law permits employers to see if job prospects are paying their mortgages, credit cards and other bills on time.
But they’re not allowed to see applicants’ overall credit scores, and they must notify candidates if they were rejected because of their credit.
But some companies bury the initial credit-search request — usually just a signature line — inside a hefty application, so that job seekers frequently aren’t aware they’re granting permission, said Adam T. Klein, an employment attorney with Outten & Golden in New York. He said firms often don’t inform prospects if their bad credit got them rejected.