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Despite the lack of evidence, a credit report can still be used to deny you a job.

When Matt Boswell heard about a remote customer service associate role he applied for from Fidelity Investments in August, he was excited. Boswell, who lives in Fort Lauderdale, Florida, had been a stockbroker and client representative in financial services for more than a decade, and Fidelity was the company he always held a position at.

After a few promising interviews, a hiring manager made an oral job offer to Boswell. In late September, he received an email notification about the next step in the application process: A background check agency would receive a consumer report containing his credit history.

Fidelity wrote in an email to Boswell, “Should you wish to explain any items that appear in the report, please contact the undersigned immediately,” HuffPost has reviewed. The email also mentioned that a final offer would be contingent on Boswell passing a background check.

Boswell said he had accumulated debt in the range of $10,000 to $12,000, so he replied to say he was willing to settle any account.

Boswell said the credit problems visible in his report stemmed from an electric scooter accident in 2019 that required three facial surgeries. Earlier, he had a credit score of 720 which he was looking for in the hope of buying a house. But after the accident, he put medical bills on his credit card and withdrew money from his 401(k) as he went on medical leave to recover from his bank job.

,From there, it was a massive downhill event,” he said. “I had some savings, but not enough to pay my credits and still survive.”

By the time he received a verbal offer from Fidelity, Boswell had been out of work since June 2020 and was living off day business and financially from his family.

“It’s a very humiliating process. It’s dehumanizing. It’s not something I like to subject myself to.”

— Matt Boswell

Boswell thought that the explanation he gave to the background screening agent was sufficient. He was drug tested and fingerprinted for the role, so he assumed his offer was safe and told friends. But on a phone call in October, a hiring manager told her that Fidelity would be unable to proceed with a job offer because her credit report contained charged-off credit accounts, meaning the loan was declared unpaid.

Boswell said he asked if there was a way to rectify the situation, but “he said they don’t allow it for my situation.”

“It’s really upsetting, and it leaves you feeling hopeless,” Boswell said of the result. “It’s a very humiliating process. It’s dehumanizing. It’s not something I like to subject myself to.”

A Fidelity spokesperson told HuffPost that a good credit check is “especially important when working in the financial services industry. Not all offers to new hires are final without a satisfactory background and credit check. All offers have language that a background check will be done once the job is accepted.”

Fidelity would not provide details about what a satisfactory credit check would look like.

Credit reports do not predict job performance. But they can perpetuate inequalities.

Boswell isn’t alone in finding that credit problems have become a barrier to getting a job, although the exact number of people who lose jobs for this reason is unknown because background screeners and employers don’t disclose data. Credit reports were created to help lenders judge the risks of taking out loans, but they are now used by a growing number of employers to judge the perceived trustworthiness of candidates when handling money or sensitive information.

These employment credit checks are common in the financial sector, but also occur in other industries, said Chi Chi Wu, an attorney at the National Consumer Law Center that focuses on fair credit reporting. Wu gave legislative testimony on the problems faced with using credit reports for employment purposes in 2019.

According to a survey of 2,137 human resources professionals, in 2018, nearly one-third of hiring managers said they run credit checks on job candidates at least some of the time, and 16% said they did so for all candidates. .

Several states, including California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington, along with New York City and Chicago, limit or restrict the use of credit reports in employment decisions, but there are exemptions. in those laws for the regions. A law banning the practice except as required by law or for national security clearance passed the House of Representatives in 2019, but has since stalled.

One major reason critics have insisted for these laws and proposals is that previous research has found no association between credit report data — such as late payments, debt in collections and charge-offs — and job performance or termination. TransUnion, a major credit reporting company, acknowledged in public testimony in 2010 that there was no research to show any statistical relationship between what’s on someone’s credit report and their job performance or their likelihood of committing fraud.

But still, the belief and practice prevail.

“TeaThere is still a very strong myth here that while credit reports reflect some sort of responsibility, your ability to manage your finances means you are a responsible, do-your-own-stuff person. it is not true. It’s about luck, circumstance and economic status,” Wu said, citing the racial wealth gap and legacy of historical discrimination that minorities face redlining and debt collection, resulting in less credit for communities of color. score occurs.

Boswell, who is Black, said that credit checks keep the White Boys Club in his industry. “I think it’s ridiculous not to hire people based on credit, knowing that in the environment we currently live in, you’re actually leaving out many minority applicants,” he said.

Wu said she’s heard the argument that most employers are sympathetic and especially understanding of medical debt — it accounts for 52% of collection items on consumers’ credit reports — but counters with this question: “Why should you? [prospective employees] Personal medical information must be disclosed to explain the object of debt collection?

Even if credit reports predict job performance, Wu said, they shouldn’t be used because it’s too common for them to contain errors. A previous Federal Trade Commission survey found that 20% of consumers had confirmed errors on their credit reports. And according to a Consumer Reports survey, 12% of Americans said they found at least one error when they checked their credit report this year.

Employers tell themselves stories about how ‘good’ or ‘bad’ credit refers to one’s ability to do a job well.

Employers don’t look at the traditional three-digit credit score when they request a report, but the information given to them still includes a lot of data points, including bankruptcy records, mortgage loans, student loan information, car payments, collection agencies. Includes loans and credits sent to. Card account details such as balance, credit limit and monthly payment.

“They’re trying to figure out if you didn’t pay because it’s something about you as a person… or you didn’t pay because of some big-picture force that was beyond your control. “

—Barbara Kvyat, economic sociologist at Stanford University

But this information doesn’t have a story, so hiring managers often make their own estimates and decisions during the interview process.

Barbara Kvyat, a Stanford University sociologist whose research involved interviewing 57 hiring professionals about using credit reports for employment decisions, calls this an “ethical story.” Kiviat found that hiring managers choose to place the blame for unpaid debts either for the individual or their position, and how they choose is subjective.

“They’re trying to figure out if you didn’t get paid because it’s something about you as a person and so, I don’t want to hire you because you’re going to bring it to my company, or you Haven’t paid because of some big-picture force that was out of your control,” she explained.

Kiwiat described a situation in his published research in which a credit report was the deciding factor against two out of three finalists vying for a school presidency. Both of these candidates were women with credit problems, one from divorce and one from wrongful foreclosure. Each candidate had to explain his position to a recruiter, who satisfied the recruiter but not the chair of the school’s board of trustees, a banker who refused to hire any candidate.

As Headhunter later explained to Kvyat, “Someone like her, who has passed down inherited wealth from generation to generation, has no idea how hard it is to maintain a good credit rating, but she’s been looking forward to seeing these women after 2008.” and he was against them.”

Kiviat said employers don’t simply pull out credit reports to determine whether a candidate is trustworthy or not. There are employers who would prefer not to look at credit history but do so because of regulation.

“If you are a financial institution and you are getting regulated and you need to prove to your regulators that you are hiring financially responsible people, a credit record is an easy way to do that,” he said. “In my research, investors will sometimes want to know: ‘Do you run credit on your employees?'”

Here’s what to do if you think your credit will be checked in the hiring process.

Under the Fair Credit Reporting Act, employers are required to share a copy of the report they pull and give candidates an opportunity to explain any items in the report before a rejection occurs, Wu said.

Wu said the best thing for job candidates if they find themselves in this situation is to check their credit reports for errors and issues and explain their side once they get the report.

“The big ‘if’ is if employers are actually following the law and reporting to you before making a decision,” she said. “Often we learn that they had given a copy of the credit report, but they had made up their mind.”

The best advice in poetry is to move the story forward. “You don’t want the first time employers know there’s a problem when they pull your credit report,” she said.

Kvyat said that the story progressed successfully includes a “moral redemption dance” that shows the job candidate is sorry and is taking the loan seriously, but can also communicate “It wasn’t me.” That was the situation.” That way, when employers run credit checks, they’re doing so with the candidate’s story in mind.

When is the best time to disclose this sensitive information? Kivit said it’s tricky: Doing so early can put a candidate out, so she recommends waiting until the end of the interview phase, when it’s clear the employer will run a credit check.

Also, Kvyat notes that giving practical advice on sharing personal information in order to gain employment is terrible. “I don’t want to live in a world where it’s good advice, but I really think it’s good advice,” she said. “It’s not cool that people get stuck in these really uncomfortable situations.”

Boswell said his experience left him “deflationary.” He’s working on improving his credit and weighing up a career switch, even though his degree in finance and years of experience in investing make him reluctant to do so.

“I have a unique set of skills developed in this industry, which really only applies to this industry. I really don’t know where I go from here,” he said. “I definitely want to work Am. I want to live, I want to live, and to do that I need money.”

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