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Mykle Ykle

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Should employers not hire you or fire you when they discover your bad credit history?

It has been a sad situation for me and many others in the USA (I don't know if this is an issue worldwide) I have great qualifications and work experience. Yet, in the majority of states you are obligated to submit to a criminal background check which is completely understandable, but that also includes a credit check. I understand that a credit check should be mandatory for executive, banking, casinos and industries directly involving money. Sadly, those of us with bad credit are being discriminated for regular jobs i.e. retail, call centers, customer service.

The government, banks and debt collectors wants their money, as they should. Yet, if you have bad credit, it's a lot harder to find a job making it impossible to get out of debt, let alone be a productive citizen.

This is an issue that is not widely discussed, I've searched online and there are some bills being proposed to end this discrimination but I don't think is really going anywhere.

I would like to have the TED community input in the most civil way possible.

Topics: Equal Rights Human Resource Unemployment credit credit checks credit reports economy eoe equal opportunity employer
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    kelly crespo

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    Mar 6 2013: I agree with ZX style, credit history is obviously for money not being paid. As an employee so are performing a service and getting paid for it.
    Maybe an issue would be as a risk management agent, or other jobs that require to handle money and investing it.

    (this would be a reason why I would think it would be negative towards a job) A bad credit report may show that the individual may not be organized and cannot handle responsibility for getting themselves in debts that they can't afford, however that is not the case with everyone. Therefore I would think that there would be better ways of qualifying an future employee.

  • Charles Curt

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    Mar 6 2013: they should listen to the statistics of how those people react and i believe that's what they do

  • ZX Style 10+

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    Mar 4 2013: You are not a customer of the employer, so the employer shouldnt fear you for not paying him back.
    Instead you get paid to do for what you are ought to.

    Unless you going to work at a bank where you are shoveling money around, then it might become doubtfull.
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    Dorian Knus

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    Mar 4 2013: No
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    Lorraine Owen

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    Mar 3 2013: They should hire you. Everyone makes mistakes (by the way, there is no "s" on "want"). How can anyone ever correct themselves if not given the chance.

    By the by, that's what Christianity is all about - giving people another chance.
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    Elizabeth Rivas

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    Mar 3 2013: I don't think employers have a right to look into our credit histories. Just like someone stated earlier, good or bad credit may or may not determine whether you're responsible as a person, but it can't determine whether you're moral and will make ethical decisions while on or off the clock and also it doesn't determine if you're even competent and able to do the job well.

    • Andrew Millington

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      Mar 3 2013: Even further, a credit check can only show that you were irresponsible with money in the past. It's really sad that companies are okay passing over potentially good employees because of credit issues.

      Something in favor of companies doing this: Apparently almost a third of people are lying about schooling, employment, and other things on their resumes.

      Something against companies doing this: Between Google Scholar and the two big psych/social science databases I have access to, I couldn't find any academic articles providing any kind of evidence that credit score matters correlates with bad employee behavior of any kind.
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        Elizabeth Rivas

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        Mar 3 2013: Just wondering what you might consider lying on your resume?You mentioned almost a third lie about schooling,employment, and other things, which I don't agree with, but is it a lie if information is simply left out?I know on our resumes we put past work experiences but what if someone wanted to expand on only a few work experiences opposed to all of their past work experiences? Also resumes are a big place for people to lie anyways,or at least in a sense,flaunting skills or abilities that they might not actually be very "excellent" at.
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          Mykle Ykle

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          Mar 3 2013: I think omitting information on a resumé is not lying if you are looking to customize a resumé for a specific employer. Embellishing however is something that should not be done, but it's too subjective.

        • Andrew Millington

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          Mar 4 2013: Well last resume like thing that I made I actually left out all specific details of my past work experience and made up a CV type thing instead because I felt my previous resume material was pretty irrelevant. As for the article I bumped into that comment from, I don't know if "lying" included leaving out irrelevant information. Obviously I put my own interpretation on what they meant since I quoted it here.

          But yeah... I tend to think more along the lines of embellishing or putting down experience/schooling that did not happen at all.
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        Mykle Ykle

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        Mar 3 2013: I'm ok with getting a background check on my previous work experience and education, but not ok with them basing their hiring decision on credit score.

        • Andrew Millington

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          Mar 4 2013: Well hopefully someone will do some research to help us figure out if there even a basis for this kind of thing then.

  • edulover learner 10+

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    Mar 3 2013: Lol,it is up to the employers.Being an employee I think working hard for the company It is what I can do.

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    Jeffrey Fadness

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    Mar 3 2013: This is a difficult, unfortunate dilemma for millions of individuals in developed countries around the world -- the Great Recession and its devastating impacts on the financial health and credit standings of so many.

    The vast majority of individuals who've fallen victim to this financial shock, or VIRUS if you will, who theretofore had been proud, financially healthy, responsible citizens -- suddenly found themselves unemployed, without sustainable income, and in many cases, over time, with little or nothing to show for their life's efforts.

    It is clearly an incredibly demoralizing experience -- inability to honor financial obligations; loss of independence; moving back in with parents, family members or friends, or vice versa; and all the resulting ripple effects -- which can carry equally destructive consequences resulting from friction, social stigma, bias, and even discrimination.

    For example, the author's statement -- "The government, banks and debt collectors wants their money, as they should. Yet, if you have bad credit, it's a lot harder to find a job making it impossible to get out of debt, let alone be a productive citizen. " -- which correctly postulates that a vicious circle can be created when your credit is damaged, regardless of cause.

    The result is a financial virus that can burn through a person's life like wildfire in a drought. It feeds on and devours all available fuel -- in this circumstance, a person's financial assets -- until there is nothing left to consume.

    The current root cause of financial illness for millions of people was not caused by dereliction or irresponsible behavior. It is a problem that I suspect is still growing. The challenge lies in finding a cure through comprehensive solutions.

    I haven't read all the responses to this post but believe it to be a social issue worthy of vigorous deliberation. I'm curious to learn from the author, if he has gained any valuable insight or utility from responses received...?
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    Lovell Nabors

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    Mar 1 2013: What many do not understand especially during the previous 7 years or so, the public in the US was and is a victim of one of the largest frauds perpetrated on a society. Everyone in the country had their credit attacked by the banks at the behest of the treasury, the fed, the ratings agencies, the FDIC and wallstreet as part of the plan to crash the real estate market in the country,coast to coast so that wallstreet could buy bonds at pennies on the dollar that were insured 100% by Fannie& private co's. It was a sinister plan and people are still being victimized by the banks who after being caught fraudulently foreclosing on homes(Robo-signings), still do so. To make matters worse every states attorney in the country instead of prosecuting them, settled to put it mildly and kept a majority of the paltry money paid for themselves. What about the homeowners who lost their homes? Maybe some will get $1,200.00! Regarding the credit fraud, ask everyone you know who had one, who had good credit, wasn't their interest rates doubled or tripled..then arbitrarily their credit limit cut? What this did was kill your credit rating, within 30-days, from excellent credit to poor credit and with no recourse.Nothing you could do about it. This despite having stellar payment histories going back 5-10-20 years. Why was this done? To remove "potential" investors from the housing market and therefore start a freefall of housing values. It was a scorched earth approach to an end. They could not, although they tried and did, only cancel all the investor loans available, (it created a pushback by those investors and the mortgage brokers). Canceled investor loans although they were required to have the highest credit and cash reserves. By killing the credit of all US consumers they effectively removed any 'potential' real estate investors from the market who might have turned to real estate to provide another source of income as a hedge against job loss..AND NOTHING WAS DONE ABOUT I
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    Orlando Hawkins 20+

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    Feb 28 2013: To answer you question I would say no. I understand the reason's for doing so (it may reveal that your a responsible or irresponsible person) but not all bad credit can be attributed to one's actions. Sometimes circumstances happen that are out of the control of the individual. Perhaps they got laid off and is unable to pay their bills..

    Perhaps it play's a factor in the decision making but they should also try to understand your situation and give you the chance to prove yourself to them....Of course this is all in the ideal sense.
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    Elizaveta Razgon

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    TED Translator
    Feb 28 2013: Actually, I believe that because of your bad credit history they have to hire you and keep you, nothing else!

    I imagine myself as a employer. I have a CV of a really qualified person for position that I have vacant. With big experience. With recommendation letters. And with bad credit history. I will hire him with no doubts because he is not only qualified and experienced, but also he will work hard and value his job because he has to pay his depts!
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      Mykle Ykle

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      Mar 1 2013: Exactly how I would feel if I was hired.

  • Thomas Merry

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    Feb 27 2013: Employers should be able to fire you (or not hire you ) for ANY reason!
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      Mykle Ykle

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      Feb 27 2013: Okay, pat yourself on the back for that one.

  • Alex Alcala

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    Feb 26 2013: Credit rating was created ina very similar way as halliburton..it seems to be the right cool financially nice thing to do but in the end people will be hurt since the credit report is not a proven fact of trustwothiness, capacity or even morality of an individual, the reality is that credit is a way of pushing away and discerning what a financial mathematical curve decides it is correct based on a bunch of assumptions, should an employer check and base a decision to hire someone based on this FICO (fallacious) score?, the reality is that it has not been proven that a person with bad credit will perform poorly at a job, actually most of the credit problems a person may face in their life is not lack of financial or moral lackness but external factors that are beyond his/her control, you can name a few: get a ticket and you surely will pay that ticket before the creidt card, get sick and you will buy the medicines before paying that christmas gift, get in a car accident, lose your wallet, gosh hundreds of happenings and collectors will be on top of your head making your life miserable and unless you are sadomasochist I dont think anyone wants to be chaed around and risk the paycheck for that, I know of several hundreds of thousands of people that lost their credit due to the last recession, are they less capable of performing their jobs because of that? I dont think so and whoever employee thinks that is living inside a fallacy bubble where the reaility doesnt enter regardless of any argument to the contrary, applicants that are requested to submit a credit report should ask for the financial reports of the companies that want to hire them (lets see if they like that).

  • Regina Claud

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    Feb 23 2013: Using credit as a hiring criteria is not good for our economy and future.

    As an example, many people, during our recent recession/depression lost their jobs due to no fault of their own, i.e. massive layoffs. Even those who were careful with their money, had to use up their savings to survive, and eventually got behind on mortgages etc. Now, with bad credit, they become permanently unemployable. The use of credit as a hiring criteria is creating a permanent under-class of people who will not be able to get out of poverty unless they create their own businesses.

    Also, good credit is NOT an indicator as to whether a person is moral, honest, or trustworthy. Ben Franklin filed for bankruptcy, yet he would not be able to get a job in this era. I bet Bernie Madoff had PERFECT credit, with all the billions he racked in. That perfect credit did not prevent him from committing financial fraud. Nor the ones running the big banks that government recently fined for their mortgage fraud activities.

    Good credit does not mean someone is competent. That person may cause more problems on the job, and cause losses, than someone with bad credit but good experience and knowledge of the business.

    Good credit does not mean they will NEVER have bad credit. It just means they have not YET run into financial problems. No one knows what difficulties the future may hold. At one point Donald Trump told his daughter that a homeless man they passed on the street had more money at that moment than he (Trump) had (see video "Born Rich" by Jamie Johnson).

    Credit rating is a brief snap shot within one's life. You can go from a 620 score to 700 within 3 months with the right strategies. Something so variable and and erroneous (many reports contain errors) should not be used to affect something as long-lasting as one's career and earning potential, the contributions they can make within the business community and society.

  • Conor Corrigan

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    Feb 22 2013: Credit history (or lack thereof) directly correlates with successful time, financial, and resource management experience. There are exceptions, but in general, this is true.

    If you accept the above, then clearly it makes sense to take credit history into consideration when hiring.

    Obviously, not everyone will accept the above as true (although it is proven).

    It is the employer who is investing time, money and resources in other persons. The employer is taking ALL of the risk... The employer owes nothing to the applicant, but owes a great deal to employees... Prior to making the investment (making an applicant an employee) the Employer ought to be able to make these judgments with all available resources.
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      Mykle Ykle

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      Feb 23 2013: like you said, not everyone will accept the above, but you also cannot assume that it's a 100% proven. It also has to be taken into consideration personal life situations that for some reason were not manageable. Many elements have to be considered for these "proven" studies to apply. It will most likely apply to people with lesser opportunities being how they were raised, their environment, family support for success, education etc, which will relate more to bad or poor time, financial and resource management. I also believe the employer has to consider the best employee possible, but we fall back on the fact that if this was the only or most important criteria, people with bad credit should not even bother to apply. There has to be a common ground.

    • Marc J

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      Feb 23 2013: Cite an academic, or other trustworthy, source for the statement, "it is proven." Without such citation, your statement is mere speculation on your part and your opinion, which adds no substantive relevance to the topic.

  • Martin Herrigan

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    Feb 19 2013: Perhaps it's time for the person who is looking for work to become a little more careful about 'who' they should be working for. There are many employers with a poor credit history and some who have a criminal background. Perhaps some employers should be required to disclose 'their' history.
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    Juliette Zahn 50+

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    Feb 16 2013: Excellent Question Mykle,

    Our plan, collectively as a people, is to heal the economy. And we need a whole new perspective and a completely new approach. The era of consumerism is over and the results of that way of thinking are clear in all aspects of life: Good they are not. That mentality (the more is better mentality) guided people into debt, cultivated greed, diminished humanity, damaged lives and the economy at the same time, delivered us to the wrong destination. We know which way not to go. Wise companies will figure this out soon. They will know not to miss out on the opportunity to have a great new employee (such as you) on their team because he / she was hit by the same financial crisis and recession that hit the whole nation.
    The great news: we are so fortunate to live at this historic time of new starts.

  • Tify Ndanoboi 30+

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    Feb 12 2013: I cant no matter how many time I read this in the media, come to the conclusion that is amazing short sighted, ignorant, prejudiced, and down right plain stupid.

    No one ever seems to equate this, with the same country, that has the highest prison population in the world. Unfortunately, the country seems to be putting itself in a "death spiral" of it's own making.

    There was a time, which was long ago, that said if you do the crime, and do the time, you're released as a free man.

    Now it seems as it's a life sentence. For people who truly realize what that means, a life of crime - is the only option. Then people wonder why they don't feel safe on the streets, go figure.

  • Frederick Morris

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    Feb 12 2013: I don't believe established bad credit should allow employers to dictate if a person should be hired or fire. Everyone at some point in their life will find themselves in a bind and in some kind of debt. Given the times we are living in it is very likely some individuals end up with bad credit. If a person has the credentials to perform the job why should they be penalized for having bad credit. Some say bad credit reflects poor business conduct when one is to meet deadlines or handle work related issues, I beg the differ. Many individuals are quite the opposite. I too was not able to attain a job because of my bad credit history. It was debt I created when I was younger and had a tough time paying off. I have raked in the top 5% at my job for performance 4 years in a row. Why should a bad credit rap sheet dictate an employer to hire me?

  • Ramon Castro

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    Feb 11 2013: I would have to say that employers should hire employees by their work ethic, and sources from previous jobs, and work sources. Good employees who work hard may have bad credit but it could be if their identity was stolen and is still trying to fix it.

  • Robert Vigerious

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    Feb 8 2013: You've been in bad credit? You've had low marks at school? You've been fired in the past? "It's your fault." is the thought that strikes the mind of any person, since in general it is known that it can be done better.

    Why should prejudices of bad credit (that you're unable to properly manage a situation, to assess risks/expenses that are needed from those that are excess, to understand a bad choices for unfavourable circumstances in time, etc.) be wrong at all? Any reason that may show you as a "looser" even if through preconceptions, has to be demonstrated to be biased or wrong.

    If you feel uncomfortable and you know the other will check it, step in the topic first. And explain how you learned to do better in the "recent" past. Show that your satisfaction with life and capabilities have improved and not diminished, maintain a positive mindset when describing it.

    Certainly, bad credit as bad marks (or good ones) means nothing, but if you don't give people the big picture, if you don't let them know you and your skills, the only information they will have on you is the one on the peace of sheet.. ..and I challenge you to state that it is a positive curriculum aspect to have bad credit. Probably it's "not bad" at most.
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      Mykle Ykle

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      Feb 8 2013: Wow, someone feels bothered! I didn't post the debate to describe my situation exclusively, but a wider spectrum of a lot of people who are in this situation. It's a TED conversation, not therapy.

      • Beth Gooden

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        Feb 16 2013: I don't think Robert was bothered, but just saying that instead of you allowing the company that you are applying to just assuming that you are a "loser" because of your bad credit, but to go ahead and tell them your situation before they pull your credit history. Let them know what your circumstances WERE and what they are now so they have the big picture and not just assume the worst.

        I, too, have bad credit and am currently in college working on my bachelor's degree and am worried about the same thing when I go for a job. Others have given me the same advice that Robert is giving you (in maybe a different way). Be proactive and let employers know you are a responsible person that can do the job they are hiring you to do and ask them not to judge you by your credit report. In all likelihood, the person doing to hiring has falled on hard times themselves.

        Good luck, Mykle!
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    Gary Malloy

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    Feb 8 2013: Mykle, for what it is worth this is my opinion. I was the owner/operator of several smaller companies (around 250 people each) and in this economy employers can be much pickier about who they hire. Think about taking a job (not your ideal job) that will allow you to build some credit. Not only the financial kind but also credit in the work industry that will show people you have changed and corrected the past. Just a thought. Hope it works for you.

  • Kunal Shah

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    Feb 8 2013: As an international student in Canada i too have though about the exact same question as you did, another question on a similar moral was that if you find mentally depressed people why would N Americans avoid and ignore the person as much as they can, especially when they know that depressed people need to be cheered up with more friends not more loneliness....

    Why is it also true that the worst performing races are never given more special attention so that they can improve and compete with the rest of us.

    Why is also true that when one shows true gangster behavior, society chooses not to react and continues allowing it to continue instead of correcting the person and changing the culture of the entire neighborhood....

    The US govt has over the past 50 yrs given up to $2tn to the African continent, yet none of the nations have made any major progress, but yet the US govt keeps doing the same thing, at the same time the same govt is able to send men to the moon successfully by not repeating the same mistakes again and again but with aiding poor nations, the US keeps making huge mistakes. Its also very funny that the US has the top businesses in the world and they make good decisions, but when it comes to aid the same mistakes are not being fixed by the top businessmen.

    Mykle, there are too many questions that do not have the sound logic we require, our govt is a representation of what we have allowed it to be, because it has all gone out of hand a thorough change is necessary, if the change does not come from within then the people shall revolt seeking freedom from mediocre legislation such as the ones I have mentioned.

    ooh I also forgot to add the gun laws.... sorry my comment does not answer any questions, but is presented so that you are provoked in to thinking what is wrong with us and society around us. We are ever becoming less human and more of mere consumers who are shielded away from the govts corrupt practices.
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      Mykle Ykle

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      Feb 8 2013: Wow...Kunal, your comment is greatly appreciated. Very sound and logical I might add.The analogy with depression is a excellent metaphor and base for comparison.

  • greg dahlen 20+

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    Feb 7 2013: I would think a bad credit history is a black mark on your character.
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      Mykle Ykle

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      Feb 7 2013: This is a immensely generalized way of thinking...again, it's not what you think of a person due to their credit, it's whether they are a good potential employee or not. Bad credit does not automatically black-mark a person's character, you don't even know the circumstances (*not reasons) they got in debt in the first place.

      • Jazz Sutto

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        Feb 8 2013: In the interview you should broach the subject before they find out. Then tell them the circumstances if it isn't due to any personal deficiencies.

      • greg dahlen 20+

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        Feb 8 2013: Well, Mykle, I've never been in a position to hire anyone, I've always been an employee. From what I know, in most cases people got into debt for "unhealthy" reasons. However, I love your point, that one still might inquire about the circumstances under which one gets into debt. But also from what I know, if you find yourself unable to pay your debts and it's through no fault of your own, there are mechanisms to deal with that where you end up with a clean record. So if someone has a bad credit history, I'd be pretty suspicious. Of course when you hire someone you weigh a million factors.
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    Jeannie Owen Miller

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    Feb 6 2013: I think we have a slightly paranoid society, driven by the means of money and what money means to us, I believe that because of how the stock market reacts to negative news. Credit reports became a substitution of trusting someone, just like message boards substituted face to face conversations. In the here and now, reality is, they substitute for getting to know someone better, learning to trust, viewing the credit report before seeing the experience that person may have. Not everyone is as bad as their credit score, which says nothing about what kind of person you are, but the employer who hires that way, should be judged by their hiring practices as a company you might think twice about working for? Afterall, a job is not only about money but about investing the most precious thing in your life, your time.

  • Barry Palmer 50+

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    Feb 6 2013: I can empathize with your situation, but I do not see this as being on the same level as other Equal Employment Opportunity criteria.

    I think credit checks became routine when unemployment went up and employers started getting double and triple the usual number of applicants. If you are facing forty applications and can dismiss twenty based on a credit check, you can cut your work in half, and perhaps fill a much needed position a day or two earlier.

    This may seem unfair to people like yourself, but outlawing this practice would be unfair to employers. This country is suppose to be the land of the free and we are gradually losing our freedoms to regulation.
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      Mykle Ykle

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      Feb 7 2013: If this were the norm, then all of us with bad credit would have to live with the fact of never being employed, having a really hard time getting employed, like I am.

      • Barry Palmer 50+

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        Feb 8 2013: Try flipping this around. If the government can tell employers that they must hire people who have a bad credit rating, then the government also has the power to tell employers that they cannot hire people with a bad credit rating.

        I think the government should not have this power.
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          Mykle Ykle

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          Feb 8 2013: I don't have to flip it around because I'm only saying that they should not discriminate if a job applicant had bad credit. Again, with your reasoning, all people with bad credit shouldn't even bother to apply for a job.

      • Barry Palmer 50+

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        Feb 9 2013: No need to repeat yourself. Fortunately there are people like Gordon Barker who are fee to hire you because the government does not have the power to tell them what to do regarding every detail of hiring and firing employees. So all people with bad credit should continue to apply for jobs, and seek out employers like Mr. Barker.

        Good luck.
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