According to a recent LA Times story, some of the 14 million unemployed jobseekers currently looking for work are caught in a vicious cycle of being behind on bills after losing a job and then having the bad credit created by the job loss spoil any chances of finding new employment. The story outlined cases of recruiters rescinding job offers after performing background checks and finding credit histories marred by overdue credit card payments, impending home foreclosures, or bankruptcy protection filings. A credit report review done during a background check has become a high hurdle for jobseekers to jump in a terrible job market.
To avoid future trouble, companies are using proactive background checks to gain insight into how jobseekers conduct their personal lives, since many believe that is how they will also conduct business. For these employers, examining credit reports during background checks helps them hire the best employees. Some staffing experts claim that money problems uncovered durnig background checks can be a sign of bad work habits in a jobseeker, while a good credit history means a worker is more likely to be trustworthy and reliable, two important traits for U.S. companies that lose billions – with a median loss of $150,000 – to employee theft annually.
Even if a background check shows a clean criminal record, many employers still aren't willing to take a chance on a jobseeker with bad credit. According to the Association of Certified Fraud Examiners, U.S. companies lose in average 5 percent of their annual revenue to employee fraud, 90 percent of which is from misappropriations like pilfering. The Society for Human Resource Management (SHRM) estimates that up to 50 percent of employers, including the U.S. government, run jobseeker credit checks. For example, applicants for security officer positions at the Transportation Security Administration (TSA) will be refused if a background check turns up more than $7,500 in past-due debt, delinquent taxes, or late child-support payments.
In most of the U.S., screening jobseekers with credit reports during background checks is legal as long as it is disclosed to applicants, who must give permission for a credit check to be run. Even with bad credit, most jobseekers agree to a background check since they believe any job offer would be lost if they refused. Most companies use reports produced for them by major credit bureaus. Federal law permits employers to see if jobseekers are paying their mortgages, credit cards, and bills on time, but does not allow them to see overall credit scores and they must notify candidates if they are rejected because of credit.
While no clear connection between credit history and job performance has been found yet, evidence exists that some information used by employers contains errors. In 2004, over one-third of companies surveyed by SHRM said they found inaccuracies in the credit histories they pulled on jobseekers. For that reason alone, jobseekers need to be aware what information will be contained in background checks performed on them, including criminal histories and credit reports. Since today’s bad job market can be even worse for those with bad credit, jobseekers are advised to run a “self background check” to see what information employers will see – before they see it – to help them find work.
While most background check companies only service employers, MyBackgroundCheck.com – a leading provider of consumer-requested background check services – has performed background checks on over one million individuals, including jobseekers, in the past year. For more information about our Jobseeker Background Check package, visit www.mybackgroundcheck.com, email info@mybackgroundcheck.com, or call 1-800-503-2364.
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