Credit scores in employment, Believers and Nonbelievers

February 12, 2009

Credit score fatigue? Here's some relief (comic relief, that is).

Long grist for the press and government media mills, credit scores have been paired with medicine, insurance, and utilities. And recently, as the fourth estate fights for its life, the alleged use of credit scores in employment is all the rage.

Consumer reporting agencies Equifax, Experian and TransUnion all state that they do not provide credit scores for employment screening. But, the credit-scores-are-used-by-employers meme has a broad reach, from the Dummies and the Fool, to the U.S. Government.

Credit scoring company Fair Isaac thinks so little of the idea of using credit scores in screening job applicants, they can't even bring themselves to institute the practice at their own company. Asked to name an employer who does, The Wizard conjured up none. But, of course, naming one means naming one who is breaking his contract as dictated by the national consumer reporting agencies.

But that doesn't stop the FICO company—along with many others, in a circular firing squad—from scaring the daylights out of consumers with the same talking point: The credit score bogeyman now lurks in the workplace, too. It's great theater and a perfect sales pitch scare tactic. The myFICO.com infomercial threatens, "In addition to credit decisions, your FICO credit score may be used to determine if a landlord will rent to you, or even if an employer will hire you!"

Meanwhile, as the scores-in-employment debate continues, Fair Isaac announces that FICO 08, the latest score, will continue to count authorized user accounts—another person's credit history added to yours. So, if it is true (and that is not to say that it is true) that employers use credit scores in hiring decisions, then authorized user accounts can affect the chances of one person being hired over another. It ain't what you know; it's who you marry.

We had better pay up to get our scores, now.

Believers

"Whether applying for a job, taking out a loan, or making a big purchase, a high credit score gives you options." - United States Department of the Treasury

"Thank you for overlooking my credit score." - Young, new employee character in TV spot "Capiche," United States Department of the Treasury

"The lack of a solid credit score typically influences the cost of credit, vehicle insurance rates, utility deposits and employer hiring decisions." - Federal Reserve

"Studies reveal that some employers make selection decisions based on names, arrest and conviction records, employment and personality tests, and credit scores, all of which may disparately impact people of color." - United States Equal Employment Opportunity Commission

"In addition to credit decisions, your FICO credit score may be used to determine if a landlord will rent to you, or even if an employer will hire you." - Fair Isaac

"Many employers have made checking a credit score a mandatory part of the job application process, just as drug testing and criminal background checks are now common requirements for jobs in many industries." - Visa USA

"Credit scores determine... in some cases, whether you get that job or apartment you’ve been hoping for." - Visa USA

"It is modeled after the hundreds of commercial credit scores that help potential lenders, landlords, and employers quickly gauge your credit history and decide what kind of a risk they might be taking if they approve your application." - Experian*

"If they're still job hunting, a weak credit score can come between them and getting hired -- more and more employers now check an applicant's credit scores (with their approval) as part of the evaluation process." - Suze Orman

"You go to get a job, your employer looks at your FICO score, they go, I am not hiring this person because they have a bad FICO score." - Suze Orman

"And so you have sort of a hidden problem, a very clear pattern of using credit score and credit history for employment suitability, almost no information available to the applicant who was denied employment based on that, either in whole or in part, and literally no science, no causation, no correlation between credit score and credit history, and suitability for employment. Thank you." - Adam T. Klein, Outten & Golden LLP

"Employers may check credit scores when evaluating job applicants." - Washington State Office of the Attorney General

"Who checks your credit score?... Employers." - Washington State Department of Financial Institutions

"In addition, most landlords and potential employers check your FICO score to find out how responsible you are. You can be turned down for a job or denied a place to live if you have a low score. One employer in Oklahoma City recently said they turn away four out of every ten job applicants because of low credit scores." - Oklahoma State Department of Education

"Even potential employers may consider credit scores for job applicants." - Attorney General, State of Delaware Department of Justice

"Credit scores can also be used by... Employers to determine eligibility for some jobs." - University of Florida

"More employers are screening job applicants by credit score." - USA TODAY

"Potential employers, landlords and insurers routinely examine credit reports. Having a good credit score is far more important now than it ever has been," says Ken McEldowney, executive director of Consumer Action, an education and advocacy group based in San Francisco." - Wall Street Journal

"Credit scores are heavily used not only in home mortgage underwriting and pricing, but also for credit card, auto loan, employment, insurance and rental application screening." - Washington Post

"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." - Boston Globe

"Phone companies, landlords and employers may also look at your score to decide if they should give you a cell-phone contract, rent an apartment to you or hire you." - Money

"But with the rise of technology that can automatically assess consumer creditworthiness while you wait, FICO scores now are requested by insurance companies, cell-phone providers, utilities, landlords and even prospective employers. That's a reason to make managing your FICO score a priority." - BusinessWeek

"That means a lot of consumers don't know anything about the number that affects their ability to get a mortgage, a low interest rate on a credit card, and even a job." - U.S. News & World Report

"Lenders use it to determine who qualifies for a loan and what interest rate they get, insurers calculate premiums based on it, and even employers make hiring decisions with it in mind. As a result, consumers are flocking to the credit bureaus to buy their scores." - SmartMoney

"Credit-score use by employers is growing rapidly; up to 70% of all employers according to [Harvard law professor Elizabeth] Warren." - Wall Street Journal Digital Network

"Your credit score also affects the rates on your credit cards, car loans and insurance premiums, as well as your ability to get a job, rent an apartment or take out a cell-phone contract." - NBC and Kiplinger's

"And now some employers are even using that one number to determine if you should get a job." - CNN

"Banks use it to determine limits, and now some employers are even using that one number to determine if you should get a job." - CNN

"It also won't impact your credit score if your employer or other lenders look at your credit score and try to solicit your business." - CNN

"Carrying that debt can hurt credit scores, and more employers are now using those numbers to evaluate job candidates... Any applicant can ask that their credit score not be pulled, but that might send a bad signal." - WBZ-TV, Boston

"Many employers want to know credit scores." - WCBS-TV, New York

Video: "It turns out GPA and class standing are not the only numbers employers care about. Many, now, also want to know your credit scores." - Web page title: "More employers looking at credit score of applicants," KABC-TV, Los Angeles

"Some employers, especially financial institutions, will request permission from job applicants to run a credit check as part of their application process." - Wilkipedia article, Credit score (United States), section: "Non-traditional uses of credit scores"

"Your score affects how much you pay for credit, and it can affect other bills you pay, where you live and where you work." - MSN

"Credit scores, and the credit reports on which they are based, increasingly influence consumer access to credit, housing, insurance, basic utility services, and even employment." - Consumer Federation of America

"Credit scoring, for example, is being used by 30 to 40 percent of employers as an employment selection device, but they don't use it alone." - Lawyers Committee for Civil Rights Under Law

"Many employers are using credit scores to screen job applicants, claiming that someone with a poor credit history will be a less stable employee." - Consumer Credit Counseling Service of Baton Rouge

"This means that a bad score can keep people from getting a good rate on insurance, an apartment, or even a job." - Better Business Bureau

"An automatic FICO disaster information shield [dead link replacement, 7/2013; alt.] would also prevent FICO scores from becoming a barrier to reemployment of displaced people looking for new work with employers who rely in part on credit scores." - Consumers Union, publisher of Consumer Reports, regarding Hurricane Katrina

"Finally, you may be surprised to learn that even some employers may check your credit score to get a better sense of the character and reliability of the person they're planning to hire." - Minnesota Society of Certified Public Accountants

"Your credit score is also used by some credit card companies, phone companies, insurance companies, landlords and employers as a way to determine your “worthiness” for a credit card, cell phone account, car insurance or a job." - AARP

"Insurers and Employers increasingly rely on your credit scores to set your rates and determine whether or not to hire you." - Smith & Gromann, P.A.

"In addition to lenders, landlords and employers may review credit scores... Employers may review this information during the hiring process, especially for positions in which employees are responsible for handling large sums of money." - Encyclopedia of Privacy, by William G. Staples

"These days, a growing number of employers are looking at FICO scores as part of routine background checks to determine if a prospective employee is worthy of a job. The chances that you'd run into such a screen are greater if the job you're applying for gives you access to company cash or credit cards, according to employment experts." - Money Mistakes You Can't Afford to Make, by Paul Lim

"As a young person starting your career and financial life, there are two numbers that are critical to your success: Your grade point average, or GPA, and your credit score. Both can help or hinder you from getting a job, and both are reflections of your hard work, organization, and commitment to your future." - LendingTree

Nonbelievers

"For pre-employment credit reports, the credit bureaus use a special reporting format that leaves out the credit score, along with actual credit card account numbers, and age." - Lester S. Rosen

"Urban myths are those things that never really occurred but that "everybody knows" exist... Now I've got one to add: That your prospective employer checks out your credit score." - Brian O'Connor, Detroit News

"ChoicePoint does not offer credit scores for purposes of employment-related background checks and no reputable background screening company or employer uses credit scores as part of the hiring process." - ChoicePoint

"TransUnion does not provide a credit score for employment screening purposes." - TransUnion

"No, Experian's business policy prevents the inclusion of credit scores with an employment report, at Experian called Employment Insight." - Experian*

"We do not knowingly provide scores for pre employment screening." - Equifax

"An employment report provides everything a standard credit report would provide. However it doesn't include your credit score or date of birth." - Privacy Rights ClearingHouse

"Based on FCRA requirements and various state guidelines, PERSONA PLUS does not provide: credit score, age, date of birth, marital status, number of dependents, race, color or creed, or account numbers." - Financial Industry Regulatory Authority

"Your credit score won't matter because employers are not allowed to use credit scores as part of employment screening." - CNN*

"None of the big three credit reporting agencies provides scores as part of employment credit checks. Neither does ChoicePoint, one of the largest third-party providers of identification and credential verification services." - New York Daily News*

Skirting

They don't actually say hiring decision is based on score

But it isn't clear what they're saying, either.

"This three-digit number is used by banks, lenders and even employers and landlords to gauge how good you are with your money." - Oprah Winfrey

"Mortgage lenders, auto lenders, employers, cell-phone companies, and insurance companies are happy to pay up to get a glance at your FICO score." - The Money Book for the Young, Fabulous & Broke, by Suze Orman

"Employers are starting to check FICO scores. Because if you're not good with your own money maybe you won't be good with the company's money either." - Suze Orman

"But in 2009, a lousy FICO score means big trouble. Lenders, landlords, and even employers simply won't want to do business with you." - Suze Orman's 2009 Action Plan, Suze Orman

"Why is Your Credit Score So Important? It’s used by lenders, insurance companies and even potential employers and landlords, to help them determine whether you are financially responsible." - State of Ohio

"What's a good score? There's no simple answer, because lenders and others who use credit scores - such as insurance companies and employers - use the data differently." - Philadelphia Inquirer

"Banks, credit card companies, insurance companies, and even some employers look at a person’s credit score to evaluate financial responsibility." - WCPN, Cleveland, public radio station

"Still, a lot of folks -- from your lender to your landlord to your insurer to your employer -- define your character by the three-digit score that reflects what's in your credit file." - The Motley Fool

"A growing number of creditors, as well as insurance companies, employers, and landlords, use your credit score together with (or rather than) your credit history to make decisions about you." - Dummies

"You'll find that employers, utility companies, landlords, cell phone providers, and even some hospitals all check your credit score." - About.com

"Credit scores can also be used in other industries such as insurance, mobile phones, the government, and various employers." - Credit Karma

"Despite uncertainty as to its effectiveness, credit scoring is often used by employers." - The Everything Improve Your Credit Book, by Justin Pritchard

"Employers, too, run credit scores on job applicants and, in some cases, current employees." - The Beginner's Guide to Real Estate Investing, by Gary W. Eldred

"Your credit score is a calculation used by lenders, insurers, utility companies, landlords and sometimes even employers to evaluate your financial responsibility." - LendingTree

"Lenders, insurers, landlords, employers and utility companies use your credit score to determine if you qualify for a loan, and at what interest rate and credit limit." - Citibank

"Loretta Abrams, senior vice president of Consumer Affairs at HSBC-North America encourages consumers to learn and enhance their credit scores which affect every aspect of our daily lives, from purchasing homes and cars to finding employment and renting an apartment." - HSBC

*Claims, both, that scores are used, and that scores are not used.