The Washington Independent
The Washington Independent

Are Employers Performing More Credit Checks on Job Applicants?

It has become recession-era gospel: Employers are performing more credit checks to screen out job applicants -- an unfair and sometimes banned practice, and one

Candice Burns
News
Last updated: Jul 31, 2020 | Jul 26, 2010

It has become recession-era gospel: Employers are performing more credit checks to screen out job applicants — an unfair and sometimes banned practice, and one making it harder for indebted or impoverished job seekers to find work. But just because it is gospel, reported over and over again, does not make it true.

The New York Times reported on the phenomenon back in April, focusing on credit-check companies promoting their services to hiring businesses and on new regulations to prevent employers from looking into applicants’ financial backgrounds. The article says:

With millions of Americans nursing damaged credit reports after a bruising recession, some lawmakers are seeking to limit the use of credit reports as a factor in hiring. Legislators in more than a dozen states have introduced bills to curb the use of credit checks during the hiring process, and three states have passed such laws.

Dozens more articles and posts have elaborated on the phenomenon since. On July 22, CNN ran a story entitled “Job Seekers’ Latest Hurdle: Credit Checks.” The first lines of the article read:

Falling behind on your bills? It could cost you a job. An increasing number of employers are using credit checks to screen potential job applicants. So missed payments on your mortgage, car or credit card could keep you from getting hired.

All of these stories rely on studies by the Society for Human Resource Management, or SHRM, showing that employers are more and more often turning to credit checks to screen applicants. The CNN story notes: “60 percent of employers are using credit checks when filling at least some of their openings. Only 35 percent reported checking credit in a 2003 survey, and only about 13 percent did so 1996.”

But such bold conclusions come as a surprise to the SHRM itself. The organization says it has no longitudinal studies about the percentage of employers performing credit checks — and that comparing the 1996, 2003 and 2009 studies is comparing apples to oranges.

The questions differ in the three years — meaning comparing them is not rigorous and is potentially misleading. In a 1996 workplace violence survey, SHRM asks employers, “Does your organization thoroughly investigate the background of potential employees? If yes, how?” It then supplies several options and lets the employer pick the ones it used. 19 percent — not 13 percent — of employers say they use credit checks.

In a 2003 workplace violence survey, SHRM tweaks the question — not asking whether the employer “thoroughly” investigates backgrounds — and instead just wondering, “How does your organization investigate the background of potential employees?” 35 percent say they use credit checks — the sixth most popular of seven options.

Then, in 2009, the question is totally different. In a background checking survey released in 2010, the SHRM directly asks: “Does your organization or an agency hired by your organization, conduct credit background checks for any job candidates by reviewing the candidates’ consumer reports?”

About 60 percent of employers say they use consumer reports — overall. But 40 percent of employers say they never use them, and 47 percent of employers say they use them only for select positions. (That means another way to phrase the result would be, “87 percent of employers say they do not use credit checks for most employees.”) Later questions reveal the jobs employers credit-check applicants for: high-level executive gigs or jobs where an employee has access to company coffers.

Point being, the stories about employers using credit checks to eliminate job seekers are relying on a misreading of the data — data that is inconclusive on the question. I am sure that many employers use credit checks to unfairly disqualify potential candidates. But these stories should note these trend stories are based only in anecdotes, not in statistics.

Candice Burns | Candice Burns has worked in the real estate industry for a long time. She understands the importance of a home for long-term happiness and has dedicated her career to placing people in the home of their dreams. Candice's passions for helping others during difficult times and a strong interest in high-end, luxury homes drove her to explore real estate. She's been in the real estate business for ten years and has helped over 3,500 people find homes during that period. She earned a bachelor's degree in business administration from the University of Los Angeles. She's worked with some of Los Angeles' most prestigious real estate firms.

Related

$1.89 billion given to states to fight HIV

The federal government Monday announced more than $1.89 billion in funding to states to fight the HIV epidemic with access to care and with more cash for the failing AIDS Drug Assistance Program. According to an HHS press release , $813 million of that money will go directly to the ADAP programming. An additional $8,386,340 will be issued as a supplement to 36 states and territories currently facing a litany of unmet needs and access issues.

Army Data Shows Constraints on Troop Increase Potential

If President Obama orders an additional 30,000 to 40,000 troops to Afghanistan, he will be deploying practically every available U.S. Army brigade to war, leaving few units in reserve in case of an unforeseen emergency and further stressing a force that has seen repeated combat deployments since 2002.

1. Brian Schweitzer

As governor of Montana, Schweitzer doesn’t represent one of the most highly populated, high-profile electoral states in the country. But this

$1.3 Million for Brown

The GOP’s candidate in the Massachusetts special election raised more than one million dollars -- double the goal -- in a 24-hour moneybomb on the Ron Paul

$1.3 trillion in federal spending unaccounted for, report finds

Despite calls for independent bodies to keep government accountable, the Sunlight Foundation’s most recent Clearspending report has found the federal

#1 in Conspiracy Theories

Andrew Young’s tell-all biography of John Edwards, hitting shelves next week, is surging in one Amazon.com category in particular. #1 in Conspiracy

1 Brigade and 1 Battalion

ISTANBUL – It’s 10 p.m. in the lowest level of the Istanbul airport. In 20 minutes I’ll be allowed to board my plane to Kabul, bringing me to the

$1 Million for Toomey

Pat Toomey, the former Club for Growth president and leading Republican candidate in Pennsylvania’s 2010 Senate race, has announced a $1 million haul in the

1. Lindsey Graham

Sen. Graham (R-S.C.) is typically regarded as a reliable vote for his party, but he took the bold step of breaking with his fellow Republicans to join Kerry

Bachmann uncomfortable over earmarks ban

Republicans appear to have boxed themselves into a corner with their portrayal of earmarks as wasteful spending, as many of them have backed a moratorium on

Troubled mine holds hope for U.S. rare earth industry

China currently controls 97 percent of the world’s rare earth production. The Mountain Pass Mine could change that -- if it can overcome serious environmental concerns.

© Copyright 2021 The Washington Independent All Rights Reserved

Terms & Privacy | twi.news@washingtonindependent.com