Whether the use of credit checks for employment purposes is discriminatory to certain job applicants — which ESR also named Trend # 1 in its Third Annual Top Ten Trends in the Background Screening Industry for 2010 — is a question that will be asked as long as
employers run credit checks on job applicants with money troubles.
Employers running credit checks on job applicants must tread carefully — The screening tool is increasingly seen as unfair by state legislatures, though they may make sense in some cases... (See Credit checks)
Overall, SHRM found that 60 percent of
employers ran a credit check on at least some applicants, an increase from the 42 percent in 2006 and 25 percent in 1998.
After attaining the permission of applicants,
employers running credit checks on potential employees may use services such as Employment Screening Resources (ESR) that provide special employment - only credit checks with other background check information.
Not exact matches
A recent survey by the Society for Human Resource Management found that 60 percent of
employers asked said they
run credit checks on at least some job applicants.
In Nevada,
employers who illegally
run credit checks on prospective employees may be forced to hire them anyway.
Your future
employer may even
run a
credit check on you.
If your
credit score falls in that
credit range, you'll have difficulty being approved for new
credit, and may even have job or rental applications rejected if an
employer or landlord asks to
run a
credit check on you.
You could legally be turned down for a job solely because of poor
credit (or because you decline to give the
employer permission to
run a
credit check on you).
Even worse, many
employers now
run a
credit check as part of their job application process, and a particularly low
credit score might be seen as a lack of financial responsibility
on your part — fair or unfair as that may be, given your circumstances.
SHRM survey showed that 40 percent of
employers do not
run credit checks on any candidates.
Some potential
employers even
run credit checks on job candidates.
The contents of one bill that passed the New York state assembly (but subsequently died in the Senate) made it unlawful for any
employer to
run a
credit check on an employee unless otherwise required by law.
Federal regulations, which of course apply to all states as well, say
employers are permitted to
run a
credit check on potential employees, provided the employee is given notice of the impending
credit inquiry during the hiring process.
Running a quick background
check on the blind date you've been set up with might be a good way (or not, remember it's going to be a database search) to use the latest mobile background screening apps, but the FTC fears
employers might be using these apps for employment screening purposes — and that could very easily violate the Fair
Credit Reporting Act.
It is illegal in New York City for an
employer to indicate
on an application that they will
run a
credit check as part of their application evaluation.