Why Do Companies Require Credit Checks for Job Applicants?
If you are job hunting, do you need to have more than your job history, resume and references in order? Do you also need to make sure your mortgage or rent payments are up to date?
The EEOC http://www.eeoc.gov/ held a public Commission today to hear testimony about the growing use of credit histories as selection criteria in employment.
“High unemployment has forced an increasing number of people to enter or re-enter the job market,” said EEOC Chair Jacqueline A. Berrien. “As a result, an ever increasing number of job applicants and workers are being exposed to employment screening tools, such as credit checks, that could unfairly exclude them from job opportunities.” opportunity.”
The Commission heard from a diverse set of experts. Chi Chi Wu of the National Consumer Law Center (NCLC) noted the use of credit histories “create[s] a fundamental ‘Catch-22’ for job applicants,” especially during a period of high unemployment and high foreclosures, both of which have a negative impact on credit.” She observed, “You can’t re-establish your credit if you can’t get a job, and you can’t get a job if you’ve got bad credit.”
Sarah Crawford of the Lawyers’ Committee for Civil Rights Under Law cited studies that show credit history is a poor predictor of job performance. She also pointed out many credit reports are riddled with errors or incomplete information, making whatever predictive value they might have even less reliable.
Michael Eastman of the U.S. Chamber of Commerce, Christine V. Walters of the Society of Human Resources Management (SHRM) and Pamela Quigley Devata of the law firm Seyfarth Shaw, LLP—told the Commission that law permits the use of credit history and it is predictive in certain situations. .
However, Dr. Michael Aamodt, an industrial psychologist, said that although there is considerable research that supports using credit scores in making consumer decisions, there is little research exploring the implications of using credit checks for employment screening. Since this has the potential for being discriminatory, he said it would be wise to use an applicant’s credit history only within a thorough background check.
