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Credit Reports are not Good Sources of Information for Employment?

Do not base an application on someones credit report
Do not base an application on someones credit report
Photo by Joe Raedle/Getty Images

Have you heard? I was told that this country had a recession. Yeah, they say millions of American’s lost their jobs, life savings, homes, everything. And depending on what political party you follow, it’s not gotten much better. Depending on where you live, some areas are still in double digit unemployment and it’s been that way since 2007.

Millions of people lost everything to include their perfect credit scores. Millions of Americans had been on unemployment, but even with the extensions, that has run out. Again, depending on which party you follow, but some blame the people because they are just not trying hard enough to find a job and others just can’t find jobs.

We have people with over 20 years experience in their fields, college degrees, advanced college degrees and they can’t even get hired for basic entry level positions. Professional Recruiters are actually telling these veterans of the work force to dye their hair, dress younger, and try not to seem too old in the interviews. But that is not what this article is about.

What this one is going to touch on is the fact that “Professional” Recruiters and companies are using people’s credit reports to justify whether or not they are trustworthy and good candidates for hire. Now I can understand if the person has had a horrible credit score prior to their termination from their last employer, but many companies are not bothering to investigate the facts and going by a flawed credit reporting system as grounds to disqualify candidates for employment.

Basically, this is just another form of age discrimination. Yes, the 22 year old candidate might have a good credit report, maybe even someone as old as 25 could have a spotless report. But then again, they may of spent the last 7 years still living with Mommy and Daddy. They probably spent at least four of those years in college that again were paid for by their parents, grants, or even scholarships.

Is this far? A large majority of those people who have fallen victim to layoffs, closures, reduction in forces and jobs heading overseas are people over the age of 35. This group of people, before the financial disaster, were hard working Americans who showed up for work, paid their bills, put money into retirement 401Ks, only to have their future destroyed by forces out of their control. And now, when these Hardworking Americans are looking for work, they are told by the companies that are hiring, they are “OVER QUALIFIED.” Even when these EXPERIENCED workers beg and plead that they just want to work, they will accept large reductions in the salaries they once were paid, they are denied the opportunities.

The “Experts” out there give them advice like dressing younger, looking younger, or my favorite “time to reinventing themselves.” Isn’t that just another way of saying, you’re too old and we don’t want our elderly?

Credit Reports have been used in the past as a screening tool when hiring new employees. But just as all recruiting tools, if it’s in the hands of the wrong person, they may not know how to use it properly and to the company’s best benefit. A Philips head is a perfect tool for tightening that screw into its place, but will not work well for spreading butter across toast, even though a butter knife can work as both.

Five years ago, pulling a candidates credit report would give you some insight about their life style. Too many bills would mean they might be living beyond their means. Leans meant they were not responsible for what they used. High scores and few debts, signified they were responsible. But now times have drastically changed. With millions out of work due to the recession and companies laying off and closing, some people have lost everything. Their homes foreclosed, their vehicles repossessed, credit cards charged off, and possible leans put on their credit reports, not because they were irresponsible, but because they were victims to the economy. Five years ago, they could have sold their home and paid off their bills, but not now.

On another note, anyone who has worked with Credit Reports knows they are not always responsible for the information their reporting. Credit Reports have been brought under scrutiny about their reporting practices. The big three do not share information between themselves. In some cases, you might have a great score and record with two of them, but one might have illegitimate information that is influencing your score. There are thousands of complaints filed every year with state Attorney General Offices about credit agencies false information costing people loans, jobs, and even security clearances. These credit agencies make it your responsibility to keep their reporting up to date, but when you attempt to clear up one of their errors, its takes time, sometimes up to a year to get their error off your report.

Now that there is a glimmer of light and companies are beginning to rehire and rebuild their staffs, hiring managers and recruiters need to make some modifications and considerations in their use of Credit Reports in their screening processes. Some ideas are checking all three. It’s more expensive, but it’s more thorough. Also, give your candidates an opportunity to explain, don’t just write them off because your check list says so. There are a lot of great employees out there who lost their jobs not by their actions but because of ramifications of the economy and poor executive choices. Many of these people have already been penalized for being hardworking and loyal employees, don’t allow a checklist hiring practice further punish what might be the best employee you ever hired.