There is a very interesting article in todays Boston Globe entitled ‘Qualification: Must have a good credit history‘. Apparently a rising trend among employers is to check your credit history and use that as part of the qualification process for new hires. From the article.

LaToya Horton was temping at a management consulting firm in Boston last January when it offered her a full-time job as a clerk. Then, the firm said it needed to check her credit. Horton, 30, of Dorchester, didn’t get the job after her credit report showed $18,000 in deferred student loans.

How far is too far with reguards to your privacy and credit history? Full article text below the cut.

Qualification: Must have a good credit history
Increasingly, employers are considering how much you owe, along with your résuméBy Diane E. Lewis, Globe Staff | September 5, 2006

LaToya Horton was temping at a management consulting firm in Boston last January when it offered her a full-time job as a clerk. Then, the firm said it needed to check her credit.
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Horton, 30, of Dorchester, didn’t get the job after her credit report showed $18,000 in deferred student loans.

“My credit wasn’t perfect, but I never thought my student loans would go against me,” said Horton. “The company said I could reapply once I had two years of excellent credit, but there is no way I am going to be able to pay off those loans that quickly.”

In the past, only banks and financial service companies routinely ran credit checks on potential employees. But employers in other sectors increasingly are including them in the screening process to assess applicants’ honesty and integrity, traits not readily gleaned from a résumé.

US employers’ use of credit checks increased 55 percent over the last five years, according to Spherion , a recruitment and staffing firm with offices around the country, including Massachusetts.

“The credit check has become a general measure of responsibility and organization,” said industrial psychologist Carl Greenberg , senior vice president of Spherion . “If you cannot organize your finances, how are you going to responsibly organize yourself for a company? Organization is a measure of responsibility.”

Companies are relying on credit reports because employers, afraid of being slapped with libel suits, are no longer as candid about the performance of former workers. And the aggregation of consumer data and the Internet have made the information easier to access. Federal laws require that companies notify job applicants before conducting credit checks, butmany firms reason that viable applicants with good credit have nothing to hide.

“This is a trend that is becoming more common among employers who are not in banking or financial services,” said Chi Chi Wu , staff attorney for the National Consumer Law Center in Boston, who says the trend makes it harder for people who are laid off, newly divorced, or saddled with student loans to find full-time jobs.” The prevailing view is that all of these people are irresponsible deadbeats,” she said. “But there can be many contributing reasons such as identity theft, medical bills, or a layoff. A lot of people are just one paycheck away from financial disaster.”

Jacqueline O’Sullivan , 48, of Belmont, who joined IBM as a field engineer in January decided to tell the hiring manager about her low credit score, which was hurt by a divorce and graduate school loans. The company understood.

“I am fortunate to work at a company that understands that people may have family situations,” she said.

O’Sullivan , who repairs computer systems, said she knew she wouldn’t be placed at financial institutions because of her credit problems. But in June a client in another sector barred her from its computers because of her credit report. “I was completely astonished,” said O’Sullivan. “To assume that because someone has bad credit they are less than ethical and unable to do the job with integrity is unfortunate.”

Joseph Giamboni president of Forge Employment Resources in New Jersey, said most employers are not that interested in the actual credit score, but are looking for other information contained in the report. “The credit check establishes the identity of a person,” said Giamboni .”It shows the full legal name, especially if you want to know if the person has a checkered past. A lot of people change their names if they have something to hide, and it lists former employers who might not be named on the résumé.”

Applicant screening is just the latest use of credit reports that may catch consumers unaware. Insurance companies have been criticized in recent years for using credit information to set individual homeowners insurance rates.

Matt Fellowes , a fellow at The Brookings Institution who has studied credit, said 35 percent of US employers were checking credit reports in 2004, up from 19 percent in 1996.

But credit reports were not designed as a predictor of employability, Fellowes said, and people who have thin credit files — students, young workers, the poor, the elderly — tend to be at a disadvantage because their scores do not predict how well they will behave in the future. The reason: Too little is known about how they behaved in the past. Fellowes said companies should not rely on credit scores when making hiring decisions because “they could disqualify qualified candidates.”

The Massachusetts Public Interest Research Group supports legislation that would freeze consumers’ credit reports, making it unavailable to a range of people and organizations. A similar measure, introduced after ChoicePoint Inc ., a personal and financial data collection firm, reported that it had mistakenly sold the financial information of more than 145,000 to a group of criminals, died in committee this year.

Diane E. Lewis can be reached at dlewis@globe.com.
© Copyright 2006 Globe Newspaper Company.

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