Credit Checks

AngelaTN · July 2003

Do any of you do pre-employment credit checks as part of your background screening on ALL employees, regardless of their position? And if so, how bad does their credit have to be before you refuse to hire them?

(This question assumes compliance with the FCRA and applicable state law)

sonny · July 2003

We do and I don't agree with it. . In the 5 years I have been here we have never NOT hired someone on credit history.

Brad Forrister · July 2003

This month's poll includes the first part of your question.

Brad Forrister
Director of Publishing
M. Lee Smith Publishers

scottorr · July 2003

If you are going to be conducting credit checks on all ee, be careful. The legal update I attended said that credit checks could only be used for ees who have access to finances such as accounting people or fiduciary officers. If you use the credit check to decline employment and the applicant has no access to money you may find yourself in trouble. The background check needs to be related to the job. I believe there is case law that discourages this kind of background check.

AngelaTN · July 2003

I have checked with our attorney, and he said in TN we can run them on anyone regardless of job.

scottorr · July 2003

[font size="1" color="#FF0000"]LAST EDITED ON 07-08-03 AT 01:48PM (CST)[/font][p]Like I always say, I'm in NY so everything is always a little more regulated and I have to say I agrre on this one. Whats the point? What will you really gain vs the number of lost work time because someone forget to pay their credit card a couple of times and your position remained open.

mwild31 · July 2003

What is the cost benefit to your company in doing so? Credit checks do add - especially over time - not to mention the paperwork you have to keep track of and/or send out to employees when their report is unfavorable. Is it worth it to have it possibly challenged in court? Has it proven to be effective in recruiting? Are the applicants better if their credit is better? Do they all feel safer knowing that the person next to them has good credit too? Does the company feel safer - how do you measure it? Credit checks on employees that do have access to finances/money make sense - there's actually some common sense reasons to do so, credit checks on ALL employees sounds like overkill.

sonny · July 2003

Amen to that!!!!

cebudragonlady · July 2003

The problem with hiring or not hiring someone in Accounting/Finance
based on a credit report,is that the credit reports do not state the circumstances.

In today's ailing economy, a perfectly good employee can easily lose his/her job, get laid off for months, go bankrupt- and then get screwed by the credit report when trying to find a job. The resulting bad credit has nothing to do with job performance. In such a case, a lawsuit could be forthcoming. You might have to prove in court ( if you can ) that bad credit makes a person unfit for hire.

Chari

jmpmo · July 2003

xclap

Good answer! We have been in business for over 25 years and have never done credit checks. We have a very low turnover rate, as some of you know I have only had one position open. We have never had any kind of financial issue with anyone in our Accounting department, Credit, etc. I agree that you can't know why their credit is good or bad. Someones personal money dealings have no impact on whether or not they will do the job or be "tempted" to steal money from you. When I was younger and was a manager for Wal-Mart we had an employee who was under scanning for a friend and they were a very wealthy family. A persons character is the only thing that is going to make them moral or immoral.

mwild31 · July 2003

Do you have auditor's (CPA's) inspect your records? Our accounting records came back just fine, in fact they were telling us we should borrow x;-), but one of the strongest recommendations that came back was to have credit checks performed when hiring accounting folks. Not all CPA's are the same though - but it might be worth taking a look at.

celeste · July 2003

When someone has less than favorable a credit report does that mean they will steal?

jmpmo · July 2003

We only do criminal background, no credit background. I don't think a persons credit history will tell you anything about how they can do a job etc.

MrCreosote · July 2003

We are a financial institution and run credit checks on everyone. Everyone here, except me, has access to money or account info. On credit reports I have seen candidates who regularly bounce checks at the grocery store, those who fail to pay off credit cards for high-end department stores, and one who failed to pay back a loan from her previous financial-institution employer. I think it's reasonable to keep those folks away from the cash and the accounts.
On the other hand, I have seen managers worry about a few late payments and failure to pay the cable TV company, even though failure to pay the cable TV company is considered noble and honorable by some. If you can't make a direct connection between the behavior and the job then I don't think the credit report should be considered.

hrbanker · July 2003

At this bank, I do credit checks on everyone, including the custodians. There have been times when tellers accidently threw away money. Thanks to honest custodians there was no loss to the bank. ---Does having good credit make one honest? Not necessarily, but someone who is not in debt to their eyeballs is less likely to be tempted to pocket the cash. ---Does having bad credit make one dishonest? Not necessarily, but the credit report can tell you if someone has a long history of overspending and poor money management, or if they were doing a great job of handling their credit until a downturn, such as job loss.

When notifying applicants of credit problems, I have actually had them say, "I moved from that state, so I don't have to pay that bill." or "My husband and I got divorced and I don't want to pay any of the bills from our marriage." This can be very revealing about the character of the person.

As in all references, the credit history is one more item that has to be taken on a case-by-case basis.

scottorr · July 2003

One of the companies I had worked for used to do credit checks on officers only. Our division president had outstanding credit. Five years into it, it was discovered that he embezzled over a $1,000,000. It's no wonder he had good credit, he used company money to pay his personal bills. So don't be fooled by theories, bad credit likely to steel, good credit not likely to steel. The two are not related. Bad credit also does not mean someone is dishonest. If someone has been laid off for six months, that can set their credit off for years. I have also know people who were laid off and had to take jobs that paid a lot less and could not afford to pay their bills at the same level they had before. It has been my experience that bad credit history is not a good indicator of future performance.

DeidreFR5 · July 2003

We're a bank and do credit reports and criminal history reports (felonies) on all employees. We have our senior loan officer read the report, and use "would we give this person a loan" as our standard. We tell (and they sign a waiver) applicants that this will be done and ask in advance if they believe there will be a problem. It's sad that many people tell us their credit is fine and then when the report comes its horrible. Many younger people have no idea what bad credit is (if credit card companies send me offers, it must be good). If we decline an applicant because of credit, we send them a copy of their report and notify them of the problem. They have ten days to explain their credit. If they cannot, we send them a non-hire letter. If they have an explanation (divorce, illness) and can see a specific pattern (unable to pay bills during a specific period, but paid at other times), we will make an exception. The FCRA has specific guidelines.

cruiser · July 2003

I work in a bank and we do run credit checks. Our bonding company will not bond someone who has extremely bad credit. Also, FDIC examiners have told us that if we hire someone with bad credit, we are putting the bank at risk. We don't, however continue to run credit checks on current employees, so I don't know what they think about someone who started with good credit but has not maintained that.

WOCO Frank · July 2003

FCRA is federal, Angela. Unless Tennessee has recently seceded from the U.S., I think you need to shop for a new attorney.

Credit Checks

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