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Will Your Credit Report Disqualify You For a Job?
coondoggie writes "Two companies that fired workers and rejected job applicants based on background checks, without informing those people of their rights, have settled with the FTC for $77,000 in civil penalties. Most experts we talked to think this case is just the tip of the iceberg. The companies — Quality Terminal Services and Rail Terminal Services — were charged with violating provisions of the Fair Credit Reporting Act, which requires employers to get permission to look at individual credit reports. If you don't get a job because of information in your report, the employer must show you the report and tell you how to get a copy from the consumer reporting company. There is no charge for the report if you request it within 60 days of getting notice that you did not get a job."
Your credit report might disqualify you from posting on Slashdot.
IMO, unless you work directly with cash or are in a position where fraud would be easy, employers have no right to that information.
Shit happens in peoples lives leaving them in precarious positions and things dont get paid on time. Having employers deny applicants based on their credit could put people in a downward financial spiral.
You can't legislate goodness. Let each to his own destiny, by will of his freely made choices.
In this economy, there are literally dozens of out of work people applying for just about every opening. Assuming you were turned down for a position, how would you ever know that the reason was due to a background check? Maybe you smell bad or your facial hair is unkempt. Maybe your fingers were stained orange from the Cheetos you eat all day long in your mom's basement. It could have been your broken flip-flops or the raggedy jeans you haven't washed since January. It's possible that the interviewer was put off by your labored breathing and the whistling sound from your nose. I'd bet the abundance of nose hairs was also a factor. While perfectly natural, it probably wasn't the best idea to let loose a SBD in the interview. Shampooing with RID or conditioning with Nix might have kept those jumping lice to a minimum. Finally, ranting about the GPL and Open Source might be friendly banter here on Slashdot, the interviewer was probably asking about the festering open sore on your leg.
It reminds me of people who send random requests under the FOIA. Sure, there is a chance that you may hit on something, but without any actual evidence, how could you ever really know whether there is something there?
The whole idea behind credit reports being used for anything other than whether or not you should be extended credit leaves me sickened. I've known too many hard working people who've had tough times for legitimate reasons who have been horribly screwed by this crap. Even the government mandated free credit reports are kind of bizarre, I had to forcibly tell these scum to cancel an account at one of the "bureaus" three times over the phone for an apparently ongoing reporting service that I didn't have a way to op out of and I still didn't get all the charges back.
A negative credit report, i.e. you being strapped for cash, means that you may be susceptible to bribes. And with more and more jobs dealing (directly or indirectly) with you offering not only a service but also a "quality report" (in terms of liability and assumption thereof), this becomes an issue.
How easily would it be to make you look the other way when something is unsafe, even if you (or your company) are liable for it if something goes wrong, when a few greens are being slipped into your pocket? I mean, look around you, it works for people who are anything but poor, whose doors aren't besieged by repo departments and who don't get "some goons are coming and breaking your legs" letters, how much easier is it when they know those bills could help them get some food on the table of their kids?
I'm not saying that this is how it should be, or that anyone with a poor credit is easily bribed (actually, if they were, would they have bad credit ratings?), but for some positions this makes absolutely sense.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Try working for the US Government. If you are placed in a "position of trust", they not only check your credit report - they also will investigate your background and criminal record.
I have often wondered why it is that businesses that hire IT guys off of the street without doing any meaninful background check place them into positions that could potentially cripple/destroy them.
I am aware that this is a cliché here on Slashdot, but nevertheless this is a situation where it must be pointed out.
There is a correlation between bad credit and job performance. It might not be a particularly strong correlation, but it is used to justify credit checks by employers.
However, what they don't tend to consider is that it is probably more likely that an outside influence was the cause of both factors. For just one example: a major illness (either the employee herself or a family member) could cause both poor credit rating and poor job performance. I can think of a great many other potential causes.
This has been going on for a long time. In 2001, Vulcan (Paul Allen's company) withdrew an offer because I had too many parking tickets (~$1000) on my credit report (parking tickets are a fact of life if you work in downtown Seattle). Paying the tickets wasn't enough, and the offer was withdrawn.
busy, busy, busy
When an industrial worker at one of Ford's factories 100 years ago went to work, what could he steal? A 20-ton forge? But nowadays, with so much high-value, high-density, low-volume stuff available to employees (and management) at arms length, the question of trust is a clear concern. When this new office worker works 20 meters from an unsupervised closet full of confidential business reports, would it make sense to check whether (s)he is at minus $20,000 on her/his MasterCard?
The problem in the situation described in the article is those companies failed to inform the prospective employees of their legal rights.
Catalin Braescu
Ofaly.com
We don't have that sort of thing here, IIRC.
Proof of income and how much cash you have in the bank should be enough to get you that loan.
There are several articles lately on all the stupid personal information that employers want to dig up on applicants:
credit report
insurance history
car type
"mode of living"
What do most of these have in common? What do they want to know? They want to know that you keep all of your money in a bank account. They want to know that your retirement is invested in the stock market. They want to know that you vote and that you have a home phone line. They want to know that you have a brand new American car. They want to know that you have credit cards and that you are in debt up to your eyeballs. They want to know that you are a typical sheep.
What does this have to do with doing a job? Absolutely nothing.
Then why do they want to know all of this? Because most companies don't actually pay their employees: their banks do. And banks want to keep their money close to them, circulating in their little system. They don't want to employ anyone who might not hand their wages right back in one way or another. They want to give jobs to people who are fully invested in their little fraud that they have going. They want good little workers who are frightened when government officials talk about the economy collapsing. They want employees who enjoy seeing the government bail out failing companies and failing banks.
They want workers who will pay 10% of their earnings in interest, 25% in taxes, 15% on food, 35% on a mortgage, 10% on consumer goods, 2% on prescription drugs, 8% on a car, and 5% on insurance. They want companies that will hire workers who do so.
And the criminals in the US government take our property and earnings from us by force so they can hand it over to these fraudsters and perpetuate their illegal rackets.
"I assumed blithely that there were no elves out there in the darkness"
Once again, corporations are not people, but they want human rights. Their bottom line is their self interest, and people are their biggest liability unless they are proactive. Screw the employees and the customer; shareholder dividend is the goal, whenever possible, and permissible by law. Its seems peculiar that this company is shrewd enough to perform the illegal research, and yet, somehow incapable of following procedure, or limiting their legal exposure. Hmmm... I wonder if perhaps some of the employees that successfully passed that background check are really quite enjoying themselves now..... or maybe I'm just a wee bit cynical and mistrustful of corporate power in the hands of people.
You see, this is one of the good reasons there is the Swiss bank secrecy system. It is no-ones business how much money you have or owe! (but there needs to be a system that makes sure you pay your taxes). It is really a pity that US citizens are not allowed to use it anymore...
Credit and the reporting of credit is extremely flawed, it is designed to protect creditors and is in no way an accurate gauge of anything outside of your negative credit history. They work as hard as they can to make sure anything negative is listed but don't make an effort to list your positives. Even just having your credit checked to see if you could be approved brings down your credit score (especially when places like auto dealers "shotgun" your credit by checking with half a dozen or more lenders at once). You could have many positives that won't get listed, including small loans that you were always on time with and paid off. Often negative credit items can be listed under you from former spouses to complete strangers and you have to put in tons of time and effort to repair those mistakes which costs you money unless you've been denied. Since you can easily have 3 completely different reports, you have 3 times the work to make sure everything is listed properly on all of them. Even when they are accurate they still are no judge of your character, work ethic, driving ability, IQ, etc. It should be illegal for your credit report to be used in determining anything other than to issue you a loan, credit card or other line of credit. It's just like auto insurance companies giving you a penalty or discount based on grades in school or credit score, I mean how can how well you do in school have any direct effect on how you can drive a car? The generalization of credit reports being a judge of one's character/etc such as being organized or managing tasks/duties well is a complete farce, serial killers/organized crime/etc manage their tasks and duties pretty well yet the view of those kinds of people is not positive. Even personality quizzes that some employers utilize can't really be a good judge either if the person isn't being honest. There's more to say but I'm sure most of this has already fallen on deaf ears (and blind web surfers).
Even the government mandated free credit reports are kind of bizarre, I had to forcibly tell these scum to cancel an account at one of the "bureaus" three times over the phone for an apparently ongoing reporting service that I didn't have a way to op out of and I still didn't get all the charges back.
It sounds like you were had by the marketing trap set up by the credit reporting companies. If you want a free copy of your credit report see the U.S. Federal Trade Commission's FAQs: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre34.shtm
Also you can, depending on what state you live in, "freeze" your report from each credit reporting company. See FAQ on Credit Report Freezes from the New Jersey Department of Banking and Insurance (NJ DOBI): http://www.state.nj.us/dobi/division_consumers/finance/creditfreeze.htm
Most of what companies do makes sense to no one but them. A company is not a single entity, even, but a whole group of idiots with different priorities and different ideas of how to do things, who probably don't talk with each other all that often, and even less often actually agree.
A previous employer shipped their entire business, hundreds of thousands of dollars worth of electronics equipment, all over the world in reusable plastic boxes with the companies name on them, sealed with velcro. Every time, at least a half a dozen people who were not their employees handled the boxes and had access to everything in them. They still did credit checks on potential employees.
In the IT industry especially, companies are fine with treating local employees like criminals, but then are more than willing to outsource essential work to god-knows-who in skeezy third-world countries.
Not trusting random people on the street is one thing. But not trusting employees is the sign of a ridiculous, horrible company.
"I assumed blithely that there were no elves out there in the darkness"
In order to qualify for some forms of Security Clearance around the world you must pass a credit check, so if your prospective place of employment requires a Security Clearance you're out of luck.
and they'll steal from a bank then they'll be much more likely to steal from you. Of course I don't want to hire thieves.
I understand that every country has their public/private sources of information on a person that can be accessed by certain people for certain purposes: countries would not function without it. This whole 'credit report' thing has me a bit slumped though; it's certainly not something that is as prevalent in its use here in the Netherlands. Sure, banks have set up a system that contains all your loans and telephone companies might not give you a phone if you have a bad history of debt and Experian says so, but all this only goes for really bad debt (like, you've had a few collection agencies 'round already) and its use is sporadic. In the US, it seems, its use is endemic. Question: is it possible /not/ to have a credit report to your name ? Can you go through life without one ?
Religion is what happens when nature strikes and groupthink goes wrong.
I hope you have a painful and horrible life as well. I'm not the OP. Suck it up and die.
I hope you find a loving woman and live a long and happy life.
[I realize that you may feel angry and lonely right now, but I know that you too will find true love.]
The problem with credit rating is not that it exists, or that it lacks sufficient predictive value for creditworthiness. It's that over the last few decades, credit rating has increasingly become a proxy for overall responsibility and our legal system has upheld its widespread misuse. Credit score is now a prerequisite for nearly everything that has to do with money. Your insurance premiums are a function of your credit score. Your ability to secure a job is dependent on your credit score. Whether a landlord will rent to you depends on your credit score. Just about anyone these days asks you for permission to peek at your score--even your mobile phone provider.
Credit rating was never meant to be used in this way. And yet, everyone does it because it works, and nobody is willing to stand up to it. The future of credit rating is that it will begin to use increasingly sophisticated methods to quantify how much risk you present to a lender, and on the flip side of the coin, it will be used to determine whether you can do ANYTHING. What jobs you are allowed to hold, which people you will be allowed to socialize with, what goods and services you are allowed to buy, which schools you will be allowed to attend, how many children you will be allowed to have, and where and when you will be able to travel.
Creditworthiness is the new class system. What else did anybody expect in a capitalist, consumer-driven society? This is merely the logical conclusion of a set of conditions on a system. Your entire worth as an individual will be quantified and reduced to a single number, and you will be completely under the control of powerful financial entities that sees society as a source of passive income.
The dirty little secret is that credit rating is a system imposed by the rich elite onto the working class. The rich do not have credit, because they have no need for it. Everything they could want, they simply buy. And they buy it with money that the working class earns as a result of real work, but gets funneled to them through--guess what--credit.
Actually, I like it.
I'm very good with money. Not a total tight-arse, but I manage my money (even over the GFC I've increased wealth by 70%). If somebody is employed, and as part of that employment, they have to balance a budget or place orders with vendors that are the best value based on what is needed, the best employee is somebody who is good with money. Somebody with proven history of bad personal financial decisions is not going to know any better with somebody elses money.
I actually have a major problem with being ripped off (that is, paying the same as everybody else or even above 80% of that price) and that part of me argues the finer points with anything involving cash. Always looking for the edge.
Who would be best for placing orders?
.
HR departments use these reports, as you well know - along with job history, what font you use on your resume, and what you eat for breakfast - to thin the herd, not determine viability. It's also the reason for credential inflation; what used to "require" a bachelors now needs a masters. Not because the job has gotten more challenging, but because there are ever more people with the older degree. In non-boom times, HR departments can be overwhelmed. Just look at the current number of applicants per job (6(!) for each one as of July 2009.)
It's not just about whether you're "trustworthy". It's trying to make those piles of resumes more manageable to HR. They use whatever they can to do so.
Ironically, this would ultimately be good for a lot of people, because it'd force them to start paying more attention to their personal finance. It becomes a lot harder to ignore your accounts and to spend money you don't have when you kow it's going to bite you in the ass during an interview or when the next round of job cuts shows up. Even for those who have bad spending habits, it might serve as a wake-up call. Sure, the system is extremely flawed and can be cheated, but it'd have an effect on most people.
+1 Bitter Irony
You misunderstand the point I have made.
The problem is not simply that the working class must borrow from the rich. It is not that in a capitalist society, the working class, by definition, requires others to lend them money to make purchases on goods and services that they cannot buy outright. The problem is that there is no counteracting force--that is to say, the rich have all the power to rewrite the rules of the game as they see fit, and thus there is no real accountability for their misdeeds.
I find it curious that you believe that my statement was anti-capitalist. To the contrary, if you apply my statement to the current economic crisis which was in no small part due to the willful underwriting of bad risks, you will clearly see that the problem is that the financial institutions have become so large and influential that the government bailed them out to prevent a complete collapse of the economy. Had the system been truly capitalist, these lenders would have had to write down their losses, rather than being rewarded by taxpayers for making bets they knew were unwise.
Capitalism when times are good and socialism when times are bad is neither capitalism nor socialism. It's simply robbery.
The credit rating problem is only one facet of the larger issue, which is that our economic system is based upon a belief that it is possible to create a sufficiently accurate quantitative model of risk such that one can "almost always" trust it. When viewed in this larger context, it becomes obvious that the trend towards more data collection, more intrusion into consumer behaviors, is the logical consequence of this flawed belief. It is this idea that the more you know about something, the more predictive you can be--but the fundamental truth remains that there is no way to eliminate risk entirely.
The working class are simultaneously victims and perpetrators of this system based upon flawed assumptions, as are the rich. But I am more inclined to blame the rich because they are the ones who have historically been in control, both financially and politically.
The lending of money, in of itself, is not a bad thing. But when mixed with an easily cowed, manipulated, and self-entitled public that is told from infancy that "you can do anything if you just try hard enough" and "you are special and deserve everything," it becomes a problem. But in whose interest is it to make a credit-based, consumer economy the foundation of the American financial system in the first place? Who do you blame--the ones who are too stupid to behave responsibly, or the ones who encourage them to be stupid in the first place, because it makes them easy to control and profit off them?
Remove credit card(s) from wallet.
Cut in half.
Never buy anything you cannot pay for.
Open a savings account.
Set aside at least 30% (40% is better) of your income.
Never work for a company that does credit checks.
Also the solution to the global economic financial crisis as oppossed to:
Give Death Star levels of funding to organisations that already proved how adept at economics they are not.
Posts, MyBio or Sig, may contain satire, sarcasm, bolded nouns be sardonic or even witty & be Church of SD
In Mexico they also need your permission to get your credit report, but guess what, many companies when they want to hire you, ask you to sign a paper to do it, if you don't want to they just go with "It is ok" but you don' get a job for some random excuse, this is known by everyone but REALLY hard to prove.
how about the fact that your credit report can contain arbitrary negative marks. case in point, i rent an extra room in my home to people that i know who are between jobs or apartments. one was kind of difficult, but livable. he put me on a rental application as a past landlord and i got a call from one of the credit bureaus. i asked a few questions and gave impartial information regarding the young man.
the creepy thing is this: i asked about offering information regarding a past tenant that skipped town without paying, and they accepted it graciously. no real proof of identification or any transaction was necessary!
The real problem I've found is not only do these companies blatantly deny your privacy with a credit check but those same people who do it *believe* that the credit system is unflawed and is somehow a perfect reflection of your habits. Quite disturbing.
||| I still can't believe Parkay's not butter.
I have one - what about the people who have no credit history? They're ultra responsible, right?
The can't get any loans or any jobs that require a credit history.
Having no credit history is worse than having bad credit. Is that a fucked up system or what? Things that require a credit rating: credit cards: can't fly, rent a hotel room, or rent a car without one; many jobs; utilities; cell phones; student loans; car loans (yeah, just try and live without a car in the US) - there's more but I can't remember them.
In other words, if you want a life, you have to have a credit history and that means you have to be in debt.
Our system has evolved into making us take on debt. We're really fucked up in this country.
After my divorce, I discovered that the wife inherits any bad credit from the marriage, but does not inherit a good credit rating. I kept my married name since I had also had a small business as well as an online presence in that name. I had a valid driver's license, and took the joint Sears store card with me, since I had a laptop under warranty from Sears, as well as a car which was registered in both our names. We had purchased several cars, a house, and had numerous store and bank credit cards for more than 20 years with never so much as a late payment; I had no credit rating at all after the divorce. I could not open a bank account even though I had a steady job at a local university, I could not get a phone. The university was very unhappy about cutting a check for my pay, they normally used direct deposit. I had to deposit my check in a trusted friend's account, or else use a store front check cashing service for a horrendous fee. I also paid my friend's phone bill by check for six months, then was able to transfer the friend's phone into my name while the friend got a new one. The friend and I were able to get a "bad-credit" secured credit card from the friend's bank in both our names, eventually transferred into my name alone and upgraded to a more normal low-limit unsecured card. I made a point of using it at least once a month, and only making the minimum payments. It took nearly a year before I finally showed up on the "credit rating" radar.
My lesson from this is for wives to get a credit card in their own name, a bank account in their own name, buy a car in their own name. Don't presume that just because you as a couple pay your debts regularly and have a sterling credit rating that this will be applied to you as an individual after a divorce, although the husband certainly keeps his rating. But, as I mentioned, any bad credit from the marriage will be applied to you.
I'm a victim of Identity theft. Some thieves got my name, address, date of birth and SSN, filled out an online form and got a credit card in my name. (Despite the mother's maiden name being wrong. Thank you very much Capital One!) The only reason I found out about it was that the thieves tripped up. They paid to have the card rush-mailed to them and *then* they changed the address from my address to theirs (or at least a drop box of theirs). The card was mailed out before the address change went through and landed in my hands.
I never did catch the thieves (slow working police who weren't prepared for an ID theft case and an uncooperative Capital One), but I learned how to prevent ID Theft: Freeze your credit. Then the thieves can't open any new lines of credit in your name. The only downside is that you can't open up any new lines yourself without first "thawing" the credit file temporarily. (Did that when I bought my new car.)
As a side benefit, people can't look at your credit file either. So jobs can't run background checks without your prior approval and banks can't pre-approve you for credit card after credit card that you don't want or need.
Here's some more information on credit freezing: http://www.consumersunion.org/campaigns/learn_more/003484indiv.html
My sci-fi novel, Ghost Thief, is now available from Amazon.com.
The title on this post is a little misleading. From TFA:
"In this case, the FTC said both defendants, who hire workers for railway and other transportation services, contracted with a consumer reporting agency to conduct background checks including criminal record reviews for employees and job applicants, and made hiring and firing decisions based on those background checks."
Note that the query also includes background checks including criminal records.
No where in the article does it state that they were denied a job due to credit history. It could have easily been due to a criminal record. The article doesn't say. Since these individuals are not in a financial industry I find the need to check credit history rather odd, unless they somehow think it reflects on character (I happen to disagree with that. Sometimes people just have shitty luck). I do agree with the fines levied however. I've worked for financial companies before and had to agree to a credit check even though I only work in IT. Perfectly acceptable and understandable if you work in that industry, although I've never been denied a job for that reason. I would definitely expect a notice to that effect with specific reasons as to why if I was turned down due to credit history.
Actually, it would be incorrect to describe the bank bailouts as "socialism". If it had been socialism, the government would have taken over management of Goldman Sachs, JP Morgan, Bank of America, etc and/or turned them into giant credit unions instead of just giving them big piles of cash to pay out bonuses^H^H^H lend. A much better name for it would be "corporatism", which you can read all about in a biography of Mussolini. Or, as you correctly pointed out, "robbery".
I am officially gone from
There is a correlation between bad credit and job performance
No. There is not even a correlation. In fact, the studies done show a negative correlation due to the people in the most debt scoring highest on job reviews (presumably due to working harder to get out of debt).
Everyone just really, really wishes there was a correlation because then they can cling to their outdated protestant worldview ("you're in debt because you are a bad, bad man. God wouldn't let good men go into debt.").
I got to admit, I'm not really against this.
Credit reports are a much better indicator of an employee's sense of responsibility, decision making, and risk taking than any interview.
If anything, an 30 minute interview (especially for a IT job) is much more unfair than a credit report culminating years of decision and risk analysis.
If you put _yourself_ just a paycheck away from disaster... how much more careful are you going to be when making decisions on the job? Your lying if you say you'd protect the company more than yourself.
Reality is that it's a better indicator of personal character than an interview.
The best way to hire is on a provisional (internship like) basis and see how someone actually does the job. But even that is subject to the teacher like scenario where once they get tenure they completely give up.
I'd rather a credit check than an interview. Says more about key characteristics than a personal impression.
Data over personal opinion (bias) IMHO.
Credit worthiness tells employers how easy travel will be for you and whether you can be trusted with "responsibility."
Every bill payment is a "deadline." Do you meet deadlines? Do you plan for unexpected outcomes? Do you prepare for the future? A credit report tells all these things fairly quickly.
The consultants who work for my company need to be able to use a personal credit card to pay for travel, then expense the true costs back to the company. If your credit is poor, can you go on a 3 week trip to Asia and cover those high costs? Just a quick estimate is $7k for flights, $6k for hotels, $2k for dining, entertaining and laundry.
If your credit can't handle that along with normal household stuff, forget us hiring you.
The employers in question failed to notify the potential employees that they would be checking credit reports. However if a company DID inform ahead of time the interviewee of such a procedure, I don't see how it would necessitate a violation of privacy. I think the issue is the "sneakiness" of a company that doesn't disclose they do this.
Getting any sort of level of government security clearance (for example) requires a background check, in which you sign a form that requires a credit check, as well. Thing is, it's all disclosed, and you sign sheets informing the employer that you're willing to submit to such checks. Further, there's a qualification on receiving the job that the government has the right to let you go if you can't obtain clearance for any sort of technicality.
I could envision a number of jobs where trust was required in the handling of money or sensitive information where this type of check would be part of the procedure. I agree with comments about how a credit report isn't always the best barometer as to whether someone is trustworthy in using money. My wife has a better credit score than I do, because she's borrowed more money than I have and has actually had to make interest payments. Whereas I've avoided most forms of debt by managing my money ahead of time, and just going without, and paying things off before interest payments are accrued.
Anyhow it's an interesting point of discussion...
http://www.beanleafpress.com
About a year ago I was told at an interview that my credit would me checked. This was for a sales position at The Source by Circuit City in Canada (Now just The Source). I was denied the job even though I nailed the interview, the manager loved me, my knowledge was well beyond that of the current staff, and I was good friends with the assistant manager. Their entire rejection was based on my credit rating which came from a failed business 5 years earlier. The manager almost gave me a uniform to take home after the interview. It was a huge kick to the head when I found out I did not get the job as I really wanted the job and I thought I was going to get the job. Also, to make things worse. I would have not known the reason for my rejection if I did not know the assistant manager. I would have just not gotten a call back.
..another way: To find employees who have just enough debt to make sure they'll take any kind of s**t from their boss to keep their job and stay afloat.
When I went through the interview and phase 1 testing process for the FBI they informed us that as we went through their hiring process, our credit scores would be checked. Why? Because if someone is struggling with their finances, they're more tempted to sell classified information.
AFAIK, anyone in the US can put a freeze on their credit report that will keep anyone - yes, even prospective employers - from getting a copy of your report. See here for details.
-- Give me ambiguity or give me something else!
Sorry, your credit repo....errr, your interview skills are a bit lacking, so we've decided not to hire you.
If you use credit, and that means getting a loan in almost any form, having a credit card, etc, you will have a credit report. What happens is the companies who loan you money or extend you a line of credit report your payment history to the three credit reporting agencies. The information reported is pretty basic, more or less all they say is if you pay on time or not. These companies then keep a file of your info.
So if you never use credit, you won't have a credit history. However, that doesn't really help you. The reason is that having no credit is usually categorized as high risk. Statistically speaking, people with no credit later in life (everyone has no credit early in life) are a credit risk.
That is what the whole thing was designed for: Evaluation of financial risk. The question every lender has is "If I loan this guy money, how likely is it I'll get paid back?" Turns out evaluating their past history is a real good indicator. In terms of the FICO scores, which is the calculation done on your history that most people think of when they think of a credit check, it neatly maps. The lower your FICO score, the higher your risk of default. You can have a look at Prosper's data for some insight in to this. Their ratings don't map to credit scores precisely, but it is similar (http://www.prosper.com/invest/performance.aspx). Note that in the AA category they have about 1% charge offs, meaning loans that defaulted. For people who have no credit it is over 60%.
Thus why it is used to decide if a company wishes to make you a loan, and what rate they wish to charge if they do. If you are very low risk, you get a good rate, if you are high risk, you get a high rate. The more likely you are to default on the debt, the more interest they want to make it worth their while.
There is really no reason to try to avoid having a credit history. All it will do is put you in a high risk category. That doesn't mean you have to go in to debt, just that you need to have credit. People online confuse that a LOT. Having good credit means that you use your credit reasonably. Having credit cards and not using them at all gives you good credit. Won't give you the max score, but it'll be good. Using cards and paying them in full each month gives you good credit. It is NOT a rating of debt, it is a rating of risk. If you have credit, don't make much use of it, and thus always pay it on time, you are a low risk. Shows lenders that you are able to manage your credit. That's what they are interested in.
So you are perfectly free to never go in to debt (though that's difficult if you want to buy a house) and still have good credit. You'll only have bad credit if you misuse it.
Now as it applies to jobs, well it is rather stupid that they check it. As I said, credit is a measure of risk of repayment of loans, nothing else. Doesn't show if you are a trustworthy person, doesn't show if you will do your job well, etc. As such it isn't something employers should be using, it isn't giving them any relevant information. It has a very narrow application.
However, in the field for which it was designed, it works well. You find out someone's credit score, and their debt-to-income ratio, and weigh that against teh amount and type of loan you are making, you have a real good idea how likely they are to repay you.
At least not in my state (Illinois):
Can an employer do a background check on my credit file?
Yes. The security freeze applies to uses of your credit file relating to an extension of credit.
Society is a series of hoops, because we all know that some humans are more functional than others.
College? A hoop.
That Cisco certification? A hoop.
Even the suit and tie? Hoops.
Get ready to leap.
If possible, employers would like us to leap through other hoops, as well. Got any criminal convictions? What about negative reputation on Google? Shoot, we'll even check out your World of Warcraft character.
Credit scores, interviewing your neighbors, and drug tests just fit right into that.
As long as we have lots of flaky, sociopathic and outright stupid people floating around, there's going to be hoops to separate the wheat from the chaff.
At least, that's a realist position. Someone else can cover the moral and social angles because I've never found them to be grounded in reality.
Futurist Traditionalism
Credit is the latest and legal form of racism. In this country it is prefect legal to treat people like crap because they have a lower credit score than you just like it was ok to do the same if there someone who skin color was darker than yours. I have been turned down for a job due the credit crap and no it wasn't because of anything else since during the interview they told me I was a perfect match for the job (Network Admin) all until they asked about my credit in which I just filed chapter 13 I was turned down right there.
Giant corporations declare bankruptcy, keep on operating, shed all their debt, and emerge from bankruptcy freed of all their debt, and just keeping doing business as usual. Sure, they may have the "bad credit" that a bankruptcy brings, but how does that really hurt them? Not like bad credit seems to hurt an individual. How would you know if you didn't get a job because of your credit? They don't have to give a reason why they didn't hire someone, do they?
...the overwhelming case of poor individuals with bad credit scores is due to poor financial decisions.
This article "Medical bills prompt more than 60 percent of U.S. bankruptcies" says otherwise.
http://www.cnn.com/2009/HEALTH/06/05/bankruptcy.medical.bills/
How does one prove that one was denied a job because of a credit report? This question is not rhetorical.
A friend of mine, who has fallen on hard times, suffering the double whammy of unemployment coupled with massive debt, has been unable to find a job for almost three years. He often gets close -- getting past the phone screen, first and second interview, tour of the facilities, and then, at the point where one would expect either an offer or "we have decided to look elsewhere", he gets -- nothing. The prospective employer simply stops responding, as if he dropped off the face of the earth. We are pretty sure something is going on, and it's almost certainly the results of a credit check, (we know his credit is ghastly) but as the company will no longer communicate, he does not know how to proceed.
I'm a little conflicted. I'm fairly libertarian in my views, and believe a company has a right to hire whom they please, but in this case it leaves someone who has had a few setbacks absolutely nowhere to go. Except, perhaps, a life of government subsistence, or I dunno, a life of crime. He wants to work and pay back his debt, but (if this is true) his debt is what is preventing him from finding work -- a classic catch-22. Where does one go from here?
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
While this is an old story it's also still a problem.
About 6 months ago I read a similar story about business's using the credit reports as a guide to see if a prospective employee would steal or not. The idea being that the better your scores the less likely you are to embezzle, or steal from your employer.
I didn't think about it at the time and forgot about it.
Then my neighbor was turned down for a job based on her credit.
She lost her job a while back (over a year ago), and instead of getting a new job right away, took the severance package and enjoyed some time off from working. By the time she was ready to work again, jobs in her field were hard to come by. After being off for so long and no longer having the severance package to help pay bills, she started falling behind with her bills. Her mortgage company, seeing all the Fed money, refused to refinance the home since she doesn't have a job and started the foreclosure process. She finally found a possible job, and was told that pending a "background check" the job was hers.
By getting this job everything would be golden for her. She could pay her bills and then refinance the house. The problem was that she didn't get the job. The reason was due to the foreclosure on her house. That showed up on her credit report. So here's the rub. Can't stop foreclosure without a job, can't get a job due to the foreclosure.
Granted, it's her own fault for not getting another job so soon after being unemployed, but I've seen dozens of folks do the same thing. You get a large payout and take a vacation.
I wonder how many other people are caught up in the same sort of issue?
You want to work, but can't due to the credit report, but if you had the job, you could resolve the bad credit report.
- Goran
Carpe Scrotum - The only way to deal with your competition.
Gattaca will arrive in a much more subtle way than Hollywood's portrayal.
http://www.imdb.com/title/tt0119177/
In our large, socially disconnected and hurry up society, using a universal method like a credit report as a background check is a great way to mitigate risk.
we have become horribly risk averse. when the only thing being measured is number of failures, the bureaucracy will do everything possible to remove the risk of failure. Thus, if you have the wrong DNA, or the wrong credit number, you are not worth the risk.
No matter what you say.
gak out
And no Irish, Blacks or Latinos allowed to apply for rental places, or hotel rooms, or well, whatever.
And people can be forced to work without holidays, for no pay, and shall obey whatever their employers requests from them.
I hope you have got the inkling of where I am heading.
The above examples just make clear why yous posting is a complete bunch of nonsense.
IANAL but write like a drunk one.
But if you are a big corporation or big wig of some kind, then it is all right to go hat in hand to finance (i.e. use other people's money) your company, even if it is a pipe dream. In several situations the government will even bail you out if you become too big to fail.
Honestly, the more people talk about the irresponsibility of the poor the more enraged I get at the hypocrisy and double standards of the people judging the poor.
IANAL but write like a drunk one.
.... most people could not progress in life, no matter how much they tried.
IANAL but write like a drunk one.
However, as an American with insurance, I get to the front of the line because I have insurance. You may be bleeding out, and there was someone waiting with a clearly broken bone, but I had insurance, so I was jumped straight to the front of the queue. I don't know about all of the EU, but my experience is that some pigs are clearly more equal. Suckers
Since I should put up or shut up, I found this resource which claims that a hair over 62% of all bankruptcies are medical, at least for the year 2007, and these were largely middle class people with jobs and medical insurance.
So, the GP's claim that the majority of bankruptcies are people living beyond their means are demonstrably false, since the majority are provably medical.
We must be living in backwords land - Hmmm - says here you are broke - therefore, No Job For You...