Bad Credit A “Catch-22” For Jobseekers During Employment Background Checks
According to an article from the Charlotte Observer, more employers are looking at credit reports during pre-employment background checks, and jobseekers should realize that what they don’t know about their own credit reports can and will hurt them.
The Charlotte Observer reports that – especially in a recession – a crippling cycle of unemployment can be created as more companies pull credit reports as they decide what people to hire, a process that can lead to a “Catch 22” situation during background checks where jobseekers need jobs to improve their credit, but can’t get jobs because their credit is poor.
According to a 2004 survey by the Society for Human Resource Management, nearly half (43 percent) of companies nationwide said they “always” or “sometimes” checked credit reports of jobseekers, the Observer reports, as compared to a similar study in 1998 in which only one-quarter (25 percent) of companies said they “regularly” or “sometimes” checked credit reports of jobseekers.
While only a few states have passed rules limiting how companies use credit reports during background checks on jobseekers, a bill currently in the U.S. House called the ‘Equal Employment for All Act’ (H.R. 3149) would amend the Fair Credit Reporting Act (FCRA) to prohibit the use of consumer credit checks against prospective and current employees during hiring or firing processes, thus preventing employers from using credit reports as part of pre-employment background checks. However, employers counter that checking credit reports helps companies fully assess jobseekers during pre-employment background checks, especially those who may have access to finances, the Observer reports.
A credit report is a summary of information about a person’s financial history collected by three main credit bureaus – Equifax, Experian, and TransUnion – and checked by employers, banks, insurers, landlords, cell phone companies, and utilities, among others, before they do business with that person.
Although, according to ConsumerReports.org, consumers find roughly 13 million inaccuracies on their credit reports each year, more than 40 percent of the consumers surveyed by the U.S. Government Accountability Office (GAO) hadn’t checked their credit reports for errors. Another recent survey by the federation of state Public Interest Research Groups (PIRGs) showed that 79 percent of credit reports contained errors of some kind, and over half (54 percent) contained personal information that was misspelled, outdated, or otherwise incorrect.
Jobseekers in particular are advised to check their credit reports so they know what information employers will see BEFORE they see it. The same goes for their criminal background checks. The last thing jobseekers need, especially in these tough economic times, is to have a mistake on their credit report or criminal background check cost them much needed employment.
MyBackgroundCheck.com – a pioneer in consumer requested and applicant supplied “personal” background checks for individuals – offers a service that jobseekers can use to take control of their own personal information and make sure their credit report and background check information is kept up-to-date, accurate, and secure from identity theft and fraud. For more information about how “personal” background checks can help jobseekers find employment, please visit www.mybackgroundcheck.com, email info@mybackgroundcheck.com, or call 1-800-503-2364. To follow MyBackgroundCheck.com on Twitter, visit www.twitter.com/MyBackgroundChk.
tahearn@mybackgroundcheck.com