What I’ve Never Understood About Credit Checks Of Potential Employees

New York City has passed legislation restricting the use of credit checks of potential employees by employers (boldface mine):

The law is being heralded nationwide as an example to follow. Federal law allows employment credit checks under the Fair Credit Reporting Act. It requires employers to get an applicant’s or employee’s permission before pulling his or her history. But really, if you want the job, how likely are you to refuse such a request?

Still, you have to wonder: How does the fact that you once couldn’t pay your credit card bill correlate to job performance? Or if someone is a poor money manager, does that mean she’s more likely to commit fraud?

We don’t really know the answers to those questions, yet many employers are allowed to screen folks on the assumption that their character is related to their credit history. As I’ve seen in my own work with people, a bad credit record can be the result of a host of problems not linked to irresponsible financial behavior. The think tank Demos and other advocates have found that many people’s credit was brought down by periods of unemployment or medical debt. Some were the victims of predatory lending practices.

Being incredibly cynical, I’m not getting the bidness strategery here. Wouldn’t you want employees who are constantly in debt? They’re a lot less likely to quit if they don’t like the job because they need the money.

There’s a reason the phrase “fuck you money” exists….

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4 Responses to What I’ve Never Understood About Credit Checks Of Potential Employees

  1. rraszews says:

    As I understand it, embezzlement is like 99.999% a linear function of need and opportunity. Simply put, whatever we like to think about ourselves morally, virtually everyone will embezzle if they both “can” and “need to”. In a cold-hearted purely capitalistic sense, an employee who’s constantly in debt is a simple mathematical threat.

    Obviously, in a perfect Ayn Rand world, the right thing to do would be to save time by executing anyone who falls behind on their credit card bills.

  2. delagar says:

    “…virtually everyone will embezzle if they both “can” and “need to”.”

    Yeah, I call bullshit on this. This is one of those things people say — like “everyone would rape and murder if it wasn’t for the policeman on the corner!” which just really is not the case.

    I’ll agree that there exists a certain percentage of people who will steal (and commit other crimes) if they can. That is percentage is nowhere near 100% and it’s ridiculous to think it is.

    • rraszews says:

      I think there’s a big difference between saying “Most people would murder if they could get away with it” and saying “Most people would steal rather than starve”.

      But I don’t actually know either way. That’s just the interpretation of the data which companies use to justify basing their hiring decisions on credit scores. (The data itself, I would think, would only actually demonstrate the converse: that virtually everyone who embezzles does it out of need+opportunity)

  3. I’ve also thought of that! I’d actually wondered if that was, in fact, the case in some instances.
    Especially some of the bozo type employers who use credit reports for jobs totally irrelevant to credit. I wondered if that’s actually why they check. To see who will be the most desperately beholden. And almost like use it as emotional leverage over the employees. I could totally see some small time business owners with delusions of grandeur, relishing that kind of information to lord over some poor soul just trying to work for a living.

    And that’s the discrepancy issue I think. The fact that there are employers who are hiring for positions which a credit report might actually be relevant, who don’t see the need to use a credit check… And then employers who are hiring for positions, performance of which surely would not be related at all to someone’s credit history, who do use credit reports.

    Frankly I think mainly it’s just become another gimmick in the HR industry for automated screening of applicants. Like sifting through resumes using a computer program which matches ridiculous keywords.
    It’s something that can APPEAR to save time/work and be more efficient. With lots of those types of business practices, it really doesn’t matter if it is efficient or not, or effective or not, as long as it appears that way to higher ups who can sell it to the ceo, shareholders, owner, whoever… who really doesn’t ask for proof, of course.

    Anyway I liked this comment:
    9/6/2015 2:18 PM EDT
    I’ve often though the proper response to an employer request for a credit report would be, “Yes, I will need to see yours as well, since you’ll be responsible for processing my paycheck and I want to make sure you’re as disciplined with your money as I am with mine.” But, since we all apparently worship at the altar of the Job Creators now, that isn’t likely to happen.

    Another comment there said that employers basically should keep their noses out of employees private lives, because it’s not a servant relationship.
    But when labor has such a weak bargaining position, and labor laws are so little enforced, of course it’s very close to a servant relationship. Employers have become much more nosy, overall, over the years.

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