The Loss of Personal Finance

by Team Dinks on May 10, 2010 · 10 comments

If you live in the Washington D.C. area you may have noticed that many employment opportunities are either with the government, or with government contracting companies. Chances are if you are applying for a position in the government sector, including government contracting companies, you will have to undergo a background check. And often that means undergoing a credit check.

I recently interviewed with a government contracting company, and they asked me if I could pass a background check. “Certainly,” I said.
“How’s your credit?” they asked.
“None of your business,” I wanted to say, “but thanks for asking.”

Are your PERSONAL finances any business of a potential employer? Hawaii and Washington State do not believe so. Hawaii and Washington have a law in place which prohibits the use of credit information in most employment decisions. In July 2009, Representative Steve Cohen from Tennessee introduced a bill which would extend this law on a national level. Chances are, however, that this bill is dead where it sits.

Some will argue that there is justification for credit checks in certain areas, such as national security or supervisory, managerial, professional or executive positions at financial institutions. I find that a little ironic. I would argue that the job seekers in the financial and government sector should be the ones requesting credit checks from the government and financial institutions for which they are applying? It is hard to imagine any individual with a worse credit score than the Federal Government, or today’s financial institutions.

Ask Donald Trump what he thinks about credit reports. Mr. Trump files bankruptcy every three years. Can you imagine someone at Trump Industries asking you for your credit report? Mr. Trump, “you’re fired!”

Perhaps you have already deduced that my credit is less than perfect—would I be making such a fuss over it, otherwise? Maybe not. Yet the fact remains that individuals continue to be turned away from employment opportunities due to poor credit scores. So until Mr. Cohen from Tennessee pushes his bill through (don’t hold your breath), many will be faced with the task of cleaning up their credit; myself included. I’d like to know what you think. Are credit checks by employers an invasion of our privacy?

Please note that all comments are subject to credit score approval.

——–
For more information on improving your credit score, I have provided two links below:
How to improve your credit score via Dinks
Facts for consumers via Federal Trade Commission

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{ 9 comments… read them below or add one }

1 Stephen Popick May 10, 2010 at 10:14 am

Jeremy,

As a government economist, I understand the need for the government to screen their employees’ credit history. You would not want to have an economist running point on a Goldman Sachs investigation who had a 100,000 dollar debt, it would be possible for that economist to be bought off by those who he is investigating (Same goes for attorneys, CIA, DOD employees.

Certainly the credit check is overdone by many private employers, but for many government jobs that require top-flight security clearances, credit is going to have to be pristine

2 Jason May 10, 2010 at 1:58 pm

Jeremy,
I have to agree with Stephen, I think for a job where security either Government or private company security are at risk it is more acceptable but still something to question. However does showing a good credit score/history make you less likely to take a bribe or a payoff? Does that make you less likely to steal information or embezzle money. Who knows I would highly doubt it. Plenty of rich and powerful people have been guilty of that.

I would say like most situations in life honesty is the best policy. I would be straight up that in your past you had credit issues, but show that you’re working on them. That your background and personal references should easily make up for credit mistakes you have in your past.

Again that makes logical sense and that is something the government is often lacking, so your results may vary.

Good Luck.

3 James May 10, 2010 at 2:38 pm

Jeremy,

Honestly, being a landlord, I will tell you that being able to check someones credit is a very important aspect of the decision making process. Thus, overall its probably better off if credit information is made more widely available.

4 Kristina May 10, 2010 at 7:23 pm

Hey,
As an employee in the financial services industry it is required that all candidates pass a credit check. This is because they feel that people with a better credit score are less likely to steal money from the bank. Also any garnishments or bankruptcy must be declared on record. Over my 10 years I have seen employees of all different levels “misplace” or “miscount” money…even children of upper management. Unfortunately a credit check is a requirement for many jobs however in my opinion it is not always an accurate indicator of a candidates potential employment performance.

5 Jeremy Heck May 10, 2010 at 8:19 pm

Stephen, I think you make a great point of someone being in the position of being “bought off” by those he/she is investigating. But it’s not that someone with good credit can’t be “bought off” as well. People are bought and sold everyday in Washington. But you bring up a valid point. But let me say this:

People can have bad credit for a number of reasons. Someone who needs medical care with no health insurance–it’s not easy paying those bills. All those people being laid off with four kids and a mortgage. Kids have to be fed. These occurrences don’t make these individuals unworthy of a job, or unworthy to rent a home for that matter.

Credit is and ugly and vile animal created by the same people responsible for our current financial situation–the credit card companies and the banks. Not long ago, these same people were handing out credit cards on college campuses—kids that were not only unemployed, but kids with student loans hanging over their head. These were the same people who handed out all the sub-prime mortgages to bus boys making minimum wage.

This is not to say that individuals should not be held responsible for their financial decisions; but this whole credit thing is just one huge disaster after another.

Again, I am no financial expert, but I know a lot of people out there with bad credit who are responsible, moral, and ethical individuals. Personally, an individual’s credit score does not tell my anything about the individuals I know and trust.

6 J. Money May 10, 2010 at 9:13 pm

Yeah, I’m 50/50 on this one. I can see the more high-profile jobs needing to know this stuff, but certainly not at all gigs. What I’d like to know is what they actually do with a 0 credit score? Does that make you look good because you’re off the radar, or does it make you look suspicious?

7 Stephen May 11, 2010 at 8:00 am

Jeremy,

Of course anyone can be bought off, good or bad credit. But statistically speaking, those with poor credit are more likely.

8 Jason May 11, 2010 at 9:16 am

@J. Money
I would also like to know how they look at a 0 credit score. As technically having a zero isn’t a bad credit score, just a lack of one.

9 Paula June 6, 2010 at 2:14 pm

I, too, question the utility of ubiquitous credit checks–especially for employment purposes. Let’s remember that using a credit check as a cheap and not-very-thorough substitute for a background check is a secondary use pitched by the credit rating agencies to expand their own business. Is anyone able to find statistical data that correlates corrupt behavior on the job to poor credit history? Or is this just a convenient assumption? I suppose that many people have bad credit because a negative event befell them–like a medical issue or divorce or job loss or just, plain being poor and having a hard time keeping up with bills. There isn’t any reason to think a person is morally deficient just because he is in such a position. Jeremy, I also found interesting your point on the payday loan commercial that targets single mothers–I wonder if women and minorities end up being discriminated against disproportionately when credit checks are used for employment purposes? As much as we want to believe that people can be understood by a single score or report, that’s a Cartesian fantasy. By the way, I don’t object to government employee credit checks–the government runs an exhaustive screening and interviewing process along with the credit checks, so there is a much better chance of understanding an applicant’s story.

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