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Dealing with Employers Who Perform Credit Checks? 1418

Posted by Cliff
from the none-of-their-business...or-is-it? dept.
Rick asks: "I recently accepted a Director level position at a small, 40 person, technology company. On my first day, I was provided with all of the standard employment paperwork such as the W2, NDA, healthcare, etc., as well as a document that is to provide my permission for the Company to do a comprehensive background check on me, including a credit history check. I am now in a stalemate position with my employer in regards to this background check document. I have refused to sign on the grounds that my personal credit information is of no business to the company and that they have no basis of need. The company argument (COO level so far, CEO is next) is that the company instituted this policy over a year ago for all existing employees and new hires, and to maintain consistency, every employee must comply. The company also maintains that the information allows them to identify potential problems with candidates or employees, in that people who cannot manage their own finances may not be good employees, or that those with troublesome credit may be more likely to steal from the company. The COO used less direct terms, but ultimately that was the argument. Have Slashdot readers successfully negotiated out of a mandatory employee credit check in the past? What arguments did you use?"
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Dealing with Employers Who Perform Credit Checks?

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  • by jgerman (106518) on Thursday February 06, 2003 @04:14PM (#5244035)
    .... seriously this should be a privacy issue. People with bad credit NEED jobs to get out of the hole they've dug. Give me a break.
    • Whatcha hiding? (Score:4, Insightful)

      by Glonoinha (587375) on Thursday February 06, 2003 @04:27PM (#5244260) Journal
      No, honestly. On my planet, anything done on moral grounds alone is a losing proposition - it is a lot like muslims justifying blowing shit up simply because Americans are infidels.

      Doesn't hold water.

      Fess up, bro. What don't you want them to find? You can tell us - we don't care. I learned long, long ago that if I can live my life like an open book, live my life like I have the cameras on me 24x7, and confess early and often of any mistakes I have made ... then I sleep better at night and don't have to worry about any 'surprises' when the doorbell or phone rings.

      Funny thing is that the norm was to order the thing, look at it for about 6 seconds and then toss it - but now that you have made a Federal case out of it they are going to go through it with a fine tooth comb once they get their hands on it - and trust me, if you want to continue working there they are going to get their hands on it.

      With rare exceptions, even your most dark skeletons in the closet won't register on their radar screens.
      • by John Hurliman (152784) on Thursday February 06, 2003 @04:34PM (#5244370) Homepage
        So you're the employer in question I take it? ;)
      • by Svartalf (2997)
        My credit report has issues because of an extended stint of not getting paid in a timely manner (or at all, in some cases) for work performed, etc.

        Two years' worth of it, in fact.

        The situation on the report is not my fault in the slightest- but the company asking for the report would deny me the employment that I could use to straighten things out (If I were hired by them). That, my dear poster, is what is wrong with all of it. It's not hiding skeletons per se, it's the very fact that it is really none of their business unless I am going to be placed in an executive capacity controlling the money of the company or working in the financial industry. I didn't make the mess they'd see, nor am I a risk because I've got issues with creditors- but they'd still hold it against me all the same as if I were responsible for it and were a risk for mis-management of company resources.
      • by MacAndrew (463832) on Thursday February 06, 2003 @05:22PM (#5244789) Homepage
        Seriously. You might have drugs or a weapon in there. Company policy forbids body. Maybe you're trying to steal a stapler. Hey, you signed away the right to object in your employment contract. Imagine there are no other jobs for you, because all the employers do it now.

        I'm not being (entirely) facetious. Privacy is a matter of degree, of sensibility. It's not about hiding crime and possibly awkward facts (though sometimes the latter -- is it true you have AIDS? impotence?). What if the economy gives you no freedom to "just walk"?

        It is remarkable that in some ways the government, with all its investigatory powers, is more limited in some ways regarding our privacy than a private employer. If you're a public employee -- even a file clerk -- the government has to take the first amendment and such into account in dealing with you. Why do we demand more respect from the government than everyone else?

        By the way, take down yout curtains at home. Publish your bank balance on the Web. You have nothing to hide, right? Even if you're comfortable with these extremes, most of us are not, and we should stick up for it rather than lose it all an inch at a time.
    • by strobert (79836) on Thursday February 06, 2003 @04:47PM (#5244586) Homepage
      The FCRA allows as one of the permisible purposes a pull for employment background checks. Not all of the information on your credit reprot is necessarily on this report. There are multiple permisible purposes for someone getting your credit data. consumer disclosure and the mortgage evaluation being two of the most common.

      For reference, the FCRA (Fair Credit Reporting Act) can be found at:
      http://www.ftc.gov/os/statutes/fcra.htm
  • w00t (Score:3, Informative)

    by the grand asdfer (228243) on Thursday February 06, 2003 @04:14PM (#5244038) Homepage Journal
    get a job somewhere else. Is this the kind of company you want to work for?
    • Re:w00t (Score:5, Insightful)

      by Strange Ranger (454494) on Thursday February 06, 2003 @04:31PM (#5244318)
      > Is this the kind of company you want to work for?

      Yes, and more importantly, the more people who refuse to submit to this the less companies will do it. It is hard and expensive to go through stacks of resumes, find a good candidate, interview, make an offer, get it accepted, etc.

      I walked out on 2 different offers for this very reason. Just the looks on their faces made it worth it. They were back to square one. And my credit was average, OK. If we all would've used our integrity a little more when it would've really counted, and said NO we wouldn't have to pull down our pants and pee in a jar to get a job today. Now its probably too late.

      Do yourself and everyone else a big favor, refuse to do it. Period. And make sure the company knows why.
  • by ratamacue (593855) on Thursday February 06, 2003 @04:15PM (#5244042)
    When exactly was your last first post?
  • Credit check... (Score:3, Insightful)

    by Cedric C. Girouard (21203) <{moc.liamg} {ta} ... +drauorigcirdec}> on Thursday February 06, 2003 @04:15PM (#5244052)
    What next ? DNA tests ?

    If they're issuing you a joint credit card, it might have grounds to stand on, but the best piece of advice you can get here will most likely be: Consult a lawyer in your own jurisdiction.

    • Re:Credit check... (Score:4, Insightful)

      by NineNine (235196) on Thursday February 06, 2003 @04:24PM (#5244187)
      Law has nothing to do with it. This is a private employment contract between two entities. The gov't has nothing to do with it, and it's not race, gender, etc. based discrimination. An employer can also say, "You'll get the job if you jump around and squawk like a chicken". It may be a bad idea, but it's nothing that a lawyer has anything to do with.
      • Re:Credit check... (Score:5, Insightful)

        by sweetooth (21075) on Thursday February 06, 2003 @04:32PM (#5244341) Homepage
        Actually the law is involved as there are fairly strict guidlines as to how a credit check can be used. Some states also have specific guidelines covering credit checks.

        First I would consult with a lawyer. Then if I couldn't get them to drop that portion of the job requirement I would tell them to take the job and shove it. These types of requirments are just as good of an indicator into the character of the company as a criminal background investigation is into the character of a prospective employee. If the requirment makes you uncomfortable, don't expect to enjoy working there.
        • Re:Credit check... (Score:5, Interesting)

          by Ooblek (544753) on Thursday February 06, 2003 @06:18PM (#5245288)
          My employer did a background check on me, and I was nervous about the credit check. It had nothing to do with mis-handling of finances. If you ever go into business for yourself, you put your ass on the line. Sometimes an industry's opportunities all dry up, and you're left holding the bag. It like getting laid off, and taking the company's debts with you. It happened, and I dealt with it. I agree it was not something that an employer should have been asking about.

          It turns out they just did a criminal background check, which I can totally understand. I guess the difference here is that my employer told me about the check up-front before I made the move. It is fairly underhanded of them to get you in the door, then pull this on you. It also makes you look bad to the company because you don't want to offer this stuff up when everyone else has.

          I guess the trick here is to not let them do it and still keep your job without everyone having meetings about you behind closed doors. Yes, consulting a lawyer is a good thing, just don't let them know you have one. I'm sure they would look at that as treacherous. You could appeal to them and let them know your "policy" is to keep your home affairs private and work affairs at work. Also pointing out that they didn't tell you of this requirement before offering you a job puts you in a really bad position. This would especially be true if you left another employer for the job, thinking you had passed all the requirements for the position.

          Personally, if I had a way out, I'd walk. The thought process that an employee with bad credit is a suspect employee is somewhat anal. Execs at many companies probably have really bad credit....the only thing is that they do everything as a corporation so their personal credit isn't touched. Even filthy rich execs (like the ones at Enron) finance houses. Considering all the shady stuff these guys are into, how do you think they get past the strict credit requirements for mortgages? (For those of you that point out that they probably pay cash for the houses....no, they don't in most cases. It makes more sense to finance it because they can make more money with the cash in hand than they can having it tied up into a house. Paying cash for a house is something that benefits a retiree more than a rich exec.)

    • DNA Tests... (Score:3, Interesting)

      by anzha (138288)

      Actually, there was a short story in Analog (I think) about 7 years ago about a woman that was facing that problem. Except it was not for her, but the baby she was carrying. She hadn't read the fine print on her employment contract and it stated that she had to have all children tested for defects when they were conceived. The company's owner had a daughter that some genetic disease that mentally damaged her and physically harmed her, hence hte clause.

      At the time, I thought...'Wow, that'll never happen...'.

      Now insert evil chuckle: heh heh heh....

  • by f1shlips (450124) on Thursday February 06, 2003 @04:16PM (#5244058)
    I couldn't get out of it, but I negotiated who would see my credit report, why they would see it, for how long, and how it was to be destroyed after veiwing. I got everything in writing and made them sign it.

    • by Erasmus Darwin (183180) on Thursday February 06, 2003 @04:30PM (#5244312)
      Besides these points, it might also be wise to include a clause allowing you to also view the credit report that they receive. There was a story on NPR recently about a guy who lost out on a job that sounded like a sure thing and included a credit report. For some reason, the company just never called him back.

      It was only a few years later that he discovered that a small, resolved issue of child support was misreported on his credit history, and it made him look like a deadbeat dad who owed $40k.

      • by Frank T. Lofaro Jr. (142215) on Thursday February 06, 2003 @06:06PM (#5245178) Homepage
        Federal law mandates that people who are behind on child support be denied licenses or any privileges from government whatsoever. It even mandates states enforce these provisions (or lose funding for something I believe, just like 55 mph speed limits and higway funds back in the day).

        (Nevada has on many of their forms and in their laws mention of this, including a provision that all such restrictions be abolished if the Federal law mandating them is repealed.)

        Also, child support violations are often felonies (thank Clinton) which also cause loss of civil rights, licensability, etc.

        These factors can make it illegal for a person to work in a certain position and/or illegal for a company to hire/refuse to fire such an individual.

        So it might not be a matter of corporate fascism as much as Federal mandate.
  • Google (Score:5, Informative)

    by SquadBoy (167263) on Thursday February 06, 2003 @04:16PM (#5244060) Homepage Journal
    is there anything it *can't* do?

    http://toolkit.cch.com/text/P05_1585.asp
    • Re:Google (Score:5, Informative)

      by Anonymous Coward on Thursday February 06, 2003 @05:41PM (#5244933)
      You could've posted the federal side, too:
      http://toolkit.cch.com/text/P05_1575.asp

      Plus the text:
      Federal Laws for Credit Checks

      The Fair Credit Reporting Act of 1971 regulates the use of consumer credit reports as a part of background checks on applicants. Hiring is a permissible purpose to do a credit check under the law, but you must keep the results confidential and must not put the results of the check in the person's personnel file.

      If the credit report shows that the person declared bankruptcy, then you also have to comply with provisions of the federal Bankruptcy Act. Under the Bankruptcy Act, you may not discriminate against an applicant solely because a credit check reveals that an applicant has sought protection under the Bankruptcy Act, been insolvent before seeking protection under the Act, and not paid a debt that is dischargeable under the Act. In other words, bankruptcy is not a valid reason to deny employment.

      Disclosures you must make. You must:

      * Clearly and accurately tell the applicant that an investigative consumer credit report may be made that could include information on the individual's character, reputation, personal characteristics, or mode of living.
      * Make the disclosure in writing, on a separate piece of paper (not as part of your job application). Your credit reporting agency can provide you with forms to be used for this purpose.
      * Mail or otherwise deliver the notice to the individual not later than three days after the date on which the report was requested.
      * Include with the disclosure a statement informing the applicant of his or her rights to request disclosure of the nature and scope of the investigation required.
      * Have the applicant sign the disclosure document and return it to you. Be sure to keep this in your files.
      * If requested by the individual, make a complete and accurate disclosure of the nature and scope of the information sought not later than five days after the date on which the individual made the request, or five days after the investigative report was requested, whichever is later.

      Business Tools

      A sample Fair Credit Disclosure Act notice appears in the Business Tools area.

      If you do deny employment because of something on the credit report (and remember, it must be something other than bankruptcy), you must:

      * inform the job applicant that employment was denied because of the credit report investigation, even if the credit report wasn't the only reason
      * furnish the individual with a copy of the credit report, along with a summary of the individual's credit rights.

      The Federal Trade Commission is very specific regarding the format of the consumer credit rights notice that must be provided to an employee or applicant if adverse action is contemplated. Fortunately, federal law requires credit reporting agencies to provide a copy of this notice with each credit report. You can use this notice to fulfill your own notification responsibilities.
  • by KoolDude (614134) on Thursday February 06, 2003 @04:16PM (#5244061)

    Gimme your job!
  • Maybe - Maybe not (Score:3, Insightful)

    by kfhickel (449052) on Thursday February 06, 2003 @04:16PM (#5244062)
    If you're at an officer level position within the company, you're probably out of luck (Director may or may not be, depending on the company). Since officers (usually) can legally bind the company, so they "need" to know about your status.

    If you're not at that level, I'd probably fight it, unless I really wanted that job.
  • Simple (Score:4, Insightful)

    by The Bungi (221687) <thebungi@gmail.com> on Thursday February 06, 2003 @04:18PM (#5244084) Homepage
    I don't understand how this is different from a drug screening test. Most employers require it. How's that different from a background check?

    They also read your email and monitor your surfing habits... them's the dregs. But it's their company, their rules, they're hiring you. If you don't like it, vote with your feet and walk away. Right?

    Personally I'd be more worried if they told me they were going to do a check to make sure I didn't have Smurfs (replace with your race of choice) in my family lineage going back 100 years. Now that would be problematic.

    • Re:Simple (Score:5, Insightful)

      by JimBobJoe (2758) <swiftheart@NOSpam.gmail.com> on Thursday February 06, 2003 @04:51PM (#5244634)
      I don't understand how this is different from a drug screening test. Most employers require it.

      As already echoed by other posts to this comment, most employers do not require drug screening.

      One thing that is really interesting is that, according to what I have heard, pre-employment drug testing in Canada is unheard of. Even companies in the US which do it at all their branches don't do it in Canada.

      Apparently one thing we can learn from the Canucks is that they have a higher regard for privacy issues (as evidenced by the Privacy Commissioner's recent and very eloquent report to Parliament [privcom.gc.ca]) and Canadians as a whole are much more willing to show their middle fingers high to any employer whose policies they don't like.

      Having said that, as time has gone on, I've become convinced that the employers who do drug testing are doing it because they have bought the line, hook and sinker, of drug testing companies, who claim all sorts of horrible things that happen if you don't do drug testing, and that you must invest in these fairly expensive and tremendously profitable tests. I believe that drug testing policies always come from the department of Human Resources, which is usually collectively as dumb as a branch of the DMV, and not much more sympathetic either.

      Someday someone with some balls is gonna invest some money in a real study on drug testing, and show how truly worthless they are, but for right now the drug testing companies are running the show.

  • Here.. (Score:5, Interesting)

    by Maeryk (87865) on Thursday February 06, 2003 @04:19PM (#5244089) Journal
    It is required for any contractor on the campus.

    They whacked this on us last year as "new and different".

    They included, but were not limited to:

    Drug testing (one time, so far, not random)
    Drivers License History/driving record check. (they did that one)
    Credit Check (they claim that it is due to the chance of getting a corporate credit card)
    Criminal background check.
    "other checks as necessary".

    That one, "other" I specifically crossed out when I signed my "permission' to do those.

    My Company (the contracting firm) basically said "Do it, or leave".. so no, I had no real choice. The fact that I live in an "employment at will" state doesnt help either.. means i can be fired any time for any thing.

    (Course, my company also believes that I can be terminated for things on my personal computer at home if I connect to their VPN network and have as much as threatened to do so. Therefore I refuse to connect from my home PC, even if it is required by my job.. I tell em I will do it at 8:00 am the next morning when I get on-site.)

    Its an ugly thing.. but I strongly suspect that you wont be able to do much about it..

    I want to see mandatory drug testing for congress, with printed pass/fail results, personally.

    Maeryk
    • Re:Here.. (Score:3, Interesting)

      by renehollan (138013)
      Credit Check (they claim that it is due to the chance of getting a corporate credit card)

      AVOID THESE LIKE THE PLAGUE!

      I once worked for a company (and not a small, "having financial trouble" outfit -- well, not while I worked there -- either) that issued corporate AMEX cards to everyone. They made you accept joint responsibility for the cards on the grounds that you had to be responsible for sundry charges that were not work related, and encouraged use of the cards for personal use (I think they got a commission kickback). Sounded fair, right?

      Wrong! The problem was that they would bill travel-related expenses to your travel for them on your card, making you jointly responsible for expenses they initiate.

      Try getting approval for a bunch of air fare and hotel stays pre-booked before an extended trip for "the man" on your expense report on your return when your signing authority (i.e. manager) is on a 5 week vacation, and Amex demands payment.

      Fortunately, fronting the substantian sum for a month was not a financial problem for me (and preserving my credit rating is important), but both Amex and I were not amused -- why sympathizing with my position, they were correct that I was jointly responsible with my employer for the bill, due "on receipt".

      The fact that I live in an "employment at will" state doesnt help either.. means i can be fired any time for any thing.

      Well, not quite. There are a few forms of illegal discrimination at the U.S. federal level (I assume you mean U.S. state). You can't be legally fired for the colour of your skin, but you can be legally fired for the colour of your eyes.

      In my case, in Illinois, I was caught between the "H1Bs can't work more than 40 hours a week" immigration restriction, and "we can fire you if you don't" "at will" employment climate. The impasse led to my leaving (when I expressed this dissatisfaction most vocally) and taking a job elsewhere, having to abandon a Labor Certification already received, and Green Card in progress. The ultimate chain of events led to my having to return to my native Canada, with my American son. Our U.S. middle class lifestyle has been reduced to a Canadian middle class lifestyle -- fairly close to U.S. borderline poverty.

      So, while things like agreeing to something you don't think will be a problem for you, even though you object to the invasion of privacy in principle, might seem a minor suspention of principles at the moment, that choice may come back to haunt you.

    • Re:Here.. (Score:4, Funny)

      by cgenman (325138) on Thursday February 06, 2003 @06:08PM (#5245198) Homepage
      I want to see mandatory drug testing for congress, with printed pass/fail results, personally.

      Oh! I want mandatory IQ tests for congress, with printed pass/fail results.

  • by jgordon7 (49263) on Thursday February 06, 2003 @04:19PM (#5244094)
    Well I know this is a standard background check policy when going for a security clearance (basis there is people with money problems can be easily corrupted). However in the private industry for a job that does not require clearance that seems like an unreasonable request.
  • by pohl (872) on Thursday February 06, 2003 @04:21PM (#5244137) Homepage
    It strikes me that a company that cannot manage its finances responsibly would not make a good employer either...but would you be allowed to peek at their ledger when seeking a job? Even if it were a policy that you had set for yourself and you must apply it to all potential employers for the sake of consistent application?
    • by JohnFluxx (413620) on Thursday February 06, 2003 @05:02PM (#5244764)
      My dad was the head of a union of a very large company. He successfully beat back the management time after time, and rarely lost.

      One piece of advice he gave me was to never say no.

      If they ask for a drug test, do not just say no. If you do, then you are being uncoopperative, and they can leverage that against you.

      The trick is to say sure you will, in return for X, where X is something that sounds reasonable, but that they cannot meet. Alternatively make X something that protects higher interests.

      Whether you agree with unions etc, I cannot deny my dad was very good at it - so I take his advice seriously.

      • Agree, an example... (Score:4, Informative)

        by Anonymous Coward on Thursday February 06, 2003 @06:42PM (#5245566)
        My current company wants me to sign an IP agreement - fine I say, I'll be happy to sign an agreement not to disclose any proprietary information as long as you take out the portion that says any "works" created by myself, at any time during employment, belong to the company - I only want works created on company time and/or using company equipment to be owned by my employer. Very reasonable, I think...

        Every time they ask me to sign the document, I send the same questions back to them, they say "we'll ask the lawyers", and I don't hear from them for a year.
  • Take the job (Score:3, Interesting)

    by nick_davison (217681) on Thursday February 06, 2003 @04:21PM (#5244143)
    Bend over, take it (principle aside, it's almost certainly meaningless anyway), work late one night, walk over to HR, pull all senior management's credit ratings, post them to f'dcompany or similar.

    On a more genuinine note. The counter to the "everyone has had to do it for the last year" is "Why only the last year? If you retroactively went back and did everyone, I'd consent, but this is clearly a discriminatory policy put in place by people who knew they couldn't be affected by it."
  • by Marasmus (63844) on Thursday February 06, 2003 @04:22PM (#5244162) Homepage Journal
    Yep - I've been in the same boat. A previous employer wanted to pull a credit report on me. Interestingly, I have very good credit, but I was planning on purchasing a new car soon and did not want to have unnecessary credit checks done, as some institutions like to use this as a perverse excuse to deny financing on a car.

    My statement was very straightforward: "I will not sign this on the grounds that you do not have the right nor privelege to require this information for the sake of employment. If you care to push this issue further, I will schedule a court date at the County courthouse and we will deal with it there."

    The employer backed off, and I worked there for nearly two years. You would have REALLY shit if you saw the sort of privacy-invading NDA employment contract they tried to require of the programmers who were hired after me... Thankfully the first programmer through the door fought that NDA until it was toned down to a sane level (at maybe 10% its original potency).
  • No Worries (Score:4, Insightful)

    by glenstar (569572) on Thursday February 06, 2003 @04:23PM (#5244166)
    Chances are, and I am speaking from experience, that the company will not run the credit check, but that your saying it is okay will show that you have nothing to hide.

    That aside, I worked as a contractor many years ago for a very large software company (whose name ends in "soft") on a project dealing with a large financial institution. The process of checks was nearly as involved as those to get top security clearance. I understand the reason behind that, of course: by working on the project I became privy to information about how the large financial institution did business.

    I am going to assume that the poster has bad credit. That in itself is not a reason to *not* get the job, especially if you are honest with your employer and state something like "I have had some bad luck in recent years, but, hey, who hasn't with the economy the way it is?"

    All of that being said, I would sign the release. Companies need to cover their asses, and this is just one more way of them doing so.

  • NPR Story (Score:5, Informative)

    by tetrad (131849) on Thursday February 06, 2003 @04:23PM (#5244167)
    National Public Radio had a story [npr.org] about this a couple days ago.
  • A Practical Solution (Score:5, Interesting)

    by syntap (242090) on Thursday February 06, 2003 @04:23PM (#5244177)
    One compromise may be to give them a notarized letter stating your FICO score. Check out MyFico.com or other sources to get this cheaply. This will satisfy their question of good vs bad credit WITHOUT giving them the details of your credit history. For those not familiar with FICO scoring, it's a single number representing your credit risk ranging from 200 to 850 or something like that. Seems to be a good way to satisfy their intentions (if they have communicated them truthfully) and your privacy.

    Barring that, I agree with another poster who suggests meeting in a room for a limited period of time with a printout of your credit report that you bring and take away from the meeting.
  • Let 'em (Score:5, Informative)

    by Matt_Bennett (79107) on Thursday February 06, 2003 @04:23PM (#5244180) Homepage Journal
    They have the right, but, by law (in the USA) if they make a negative decision because of the credit report, they have to inform you of that. This is often overlooked. There was a report on this on NPR recently (Jan 31st, All Things Considered) [npr.org].

    At the very least, you should check your credit report to make sure it is accurate.
  • Just Say No. (Score:3, Insightful)

    by mad.frog (525085) <steven@crinklinPERIODk.com minus punct> on Thursday February 06, 2003 @04:23PM (#5244181)
    Unless this is a job that you Really Want (or Really Need, for that matter), tell 'em to stick it. Times are tough for job-finding, but at the end of the day, it's just a job, and not worth sacrificing your principles over.

    Whether or not such a credit check is deemed "necessary" for a Director-level job is not really relevant, in my opinion: if it's personal information that you don't want to give, don't give it, and if they don't like it, tough.

    I wouldn't work for a company that wanted to a credit check, drug test, etc. on me, simply on principle.
  • by siskbc (598067) on Thursday February 06, 2003 @04:24PM (#5244190) Homepage
    The problem here, beyond the obvious privacy issues, is that people can be adversely affected by credit checks. I mean, where does this stop? Currently, the more credit checks you have, the worse your credit score becomes. So, if this becomes the norm, and companies start doing this even for potential hires (as they very well may), then there are going to be some people seeing their credit rating downgraded simply because they were looking for a job. It won't make an enormous difference, maybe, but even a small difference can make a difference over the life of, say, a mortgage.

    This wouldn't be so bad if getting a house didn't routinely follow getting a job...

    • by riaasucks (169141) on Thursday February 06, 2003 @06:10PM (#5245217)
      There's alot of half truths being bantered about. For the best info on credit, you need to go to Creditnet [creditnet.com].

      That being said, inquiries (or checks) on your credit fall into two distinct categories: hard and soft.

      Hard inquiries are inquiries that are initiated per your attempt to aquire credit, usually applying for new credit, sometimes by requesting credit limit increases. These stay on your reports for two years and do indeed knock a few points off of your FICO score per inquiry. The FICO formula only pays attention to hard inquiries in the past six months...anything older is not factored into your FICO score, but a creditor may still use it for approval decisions. Multiple inquiries in a one month period while shopping for auto or mortgagee loans are treated by FICO as a single inquiry.

      Soft inquiries are inquiries that can be created by viewing your own credit report, a current creditor doing an account review, employer checks and those nice unsolicited preapproval letters you get from credit card companies. These inquiries also stay on your report for two years, but they are ONLY viewed by you and have NO effect whatsoever on your credit score.

  • It's not unusual to see credit checks as part of a security clearance check... as people with great debt are often more likely to sell information or be otherwise comprimised by the offer of money.

    However, I don't know what the law says about it with respect to general employment. Check with a lawyer before you do anything to rash (either way) if it really concerns you.
  • In the minority (Score:5, Interesting)

    by nsample (261457) <nsample@NosPaM.stanford.edu> on Thursday February 06, 2003 @04:26PM (#5244239) Homepage

    I know I will be in the minority here, but if you don't like the credit check, why are you still fighting for the job? Is it the kind of place you still want to work? Admittedly, a credit check is a pretty random thing, but there's nothing that says it cannot be a condition of employment. Should they have it? I think not. Can they demand it? Absolutely.

    The decision is simple: how badly do you want this job? Let that answer guide your decision. And if you take they job, and despise the policy, work to change it from within...

    The cynic in me says "Poster has bad credit." Apparently you've already accepted the position, though, so the check doesn't stop you from getting the job. Be pleased you have one.
  • by mrs clear plastic (229108) <allyn@clearplastic.com> on Thursday February 06, 2003 @04:28PM (#5244276) Homepage
    I remember when I had to apply for a security
    clearence back in 1978, I had to provide a lot
    of information including bank and credit
    information.

    They explained to me that one of the things they
    look at is the potential vulurability of the
    person to being given financial help in return
    for some favors (secrets) and then blackmailed
    with exposure.

    I also think they look carefully at all of
    the information; credit history included; to
    try to make certain that the person is not a
    plant; that he or she did live a legitimate life
    here in the United States.

    Mark
  • by mellon (7048) on Thursday February 06, 2003 @04:29PM (#5244295) Homepage
    I hate to say it, man, but the higher up you are in the food chain, the more important it is for them that they check you out. If I were them, I would already have told you to take a hike.

    I know of too many cases of executive malfeasance to agree with your assertion that your financial history is none of their business. Particularly given that people are generally afraid these days to say anything honest in a reference because they might get sued.
  • Deal with it. (Score:4, Interesting)

    by just fiddling around (636818) on Thursday February 06, 2003 @04:31PM (#5244323) Journal
    There are many ways to respond to requests like this one.

    1) whine: not really a good solution, but a Slashdot favorite ;-)
    2) ask why: much better, and the avenue which you took
    3) refuse to comply: and live with the consequences. Of course, if they really want YOU, there is always the possibility of negociating your way out of doing it.
    4) "forget" to fill it: they may never notice! (You know: "oh, sorry boss. I just didn't have time to do that. I'll just stop working on [insert important stuff with tight schedule here] and do it right away" or simply "Sorry, I forgot. I'll fill it this afternoon")
    5) Check the privacy laws which apply. In my part of sunny Canada, even making such a request is ILLEGAL, which makes it a breeze to refuse.

    IANAL, but I can advise you to get a boss which respects you enough to leave your credit alone.
  • Abuse... (Score:5, Interesting)

    by cafebabe (151509) on Thursday February 06, 2003 @04:32PM (#5244339)
    I know this is common practice these days, but it bothers me because it has such potential for abuse. Employees are barred from asking your age, marital status, sexual orientation, etc. in an interview, but if they have your credit report, they can deduce a lot of this information. (What year were your college loans taken out? Do you have a co-signer on a home or car loan? What gender is the co-signer?)

    How will you really know why you were declined?
  • by criquet (120814) on Thursday February 06, 2003 @04:33PM (#5244351) Homepage Journal
    http://www.privacyrights.org/fs/fs16-bck.htm
  • by doonesbury (69634) on Thursday February 06, 2003 @04:35PM (#5244384) Homepage
    Here's an article on Nolo [nolo.com]. Here's the relevant portion:

    Credit reports. Under the Fair Credit Reporting Act or FCRA (15 U.S.C. 1681), employers must get an employee's written consent before seeking that employee's credit report. Many employers routinely include a request for such consent in their employment applications. If you decide not to hire or promote someone based on information in the credit report, you must give the person a copy of the report and tell them of their right to challenge the report under the FCRA. Some states have more stringent rules limiting the use of credit reports.
  • by scotay (195240) on Thursday February 06, 2003 @04:39PM (#5244448)
    I heard on the web that this works:

    1. Go for as long as you can without using your credit card before the interview.

    2. Drink lots of water(1 gal) on the day of the credit check.

    3. Never give them the first credit report of the morning.

    4. Take B vitamins. An overly-clear credit report may set off some red flags at the lab.

    ** Golden Seal and Visine are said to improve your chances of passing.

    I'm not sure how they expect these to work. I would think the guy that runs the reporting terminal is gonna notice you putting the drops in his eyes, but you might be able to spike his coffee cup with the golden seal

  • by NDPTAL85 (260093) on Thursday February 06, 2003 @04:43PM (#5244542)
    A credit check should be mandatory for every CxO level officer in every public company in the US.
    An executive at that high up in the corporate chain of command has a very heavy responsibility to the company as a whole. The company in turn has an obligation to make sure any new hires for such a position has not already placed himself or has a habit of placing himself in a compromising position that could easily be exploited by an unscrupulous third party.

    To put it simply, if a guy has extremly bad credit and is responsible for corporate accounts he may be tempted to steal from the company to cover his debt OR framed into doing so by one of his creditors. These type of executives are also the most likley to be "functional" drug users (and I'm not talking about weed) of hardcore stuff like crack, cocain, heroine....etc. At first their regular salary is enough to cover their habits but as their habits grow they need more and more money.....etc.

    Why is it so important? These are the people who run companies that employ at times tens, hundreds or thousands of people. These are hardworking folks who deserve to have people in charge who are capable of managing their personal lives to the extent that it leaves their professional lives unaffected. Otherwise you end up with more Adelphia Cable companies, Enron's, Global Crossings, WorldCom's...etc.
  • by zipwow (1695) <zipwow&gmail,com> on Thursday February 06, 2003 @04:46PM (#5244578) Homepage Journal
    If they're arguing that "your credit history indicates your responsibility as an employee" you should be able to argue that the credit history of your direct supervisor's credit history, and the credit history of every manager up to the CEO will have an impact on the stability of the company you're joining.

    Basically, I'll show you mine if you show me yours.

    A similar argument would hold for drug testing, I would think.

    I wish I'd have thought of this when I was recently required to do this. Unfortunately, I wasn't in a position to say no. Sadder still, I actually like the company with very few reservations.

    -Zipwow
  • by cenonce (597067) <anthony_t@NospaM.mac.com> on Thursday February 06, 2003 @04:48PM (#5244604)

    http://www.itslegal.com/infonet/employ/hired.asp

    Do you handle large sums of money for the company? Are you in a position of trust for binding the company to contracts?

    Then I'd say you must submit.

    -A

  • by RobinH (124750) on Thursday February 06, 2003 @04:49PM (#5244616) Homepage
    I hadn't considered the idea of using a credit check to test a new hire, but it does make a lot of sense. I heard somewhere else that an auto insurance company, Progressive [progressive.com], uses their clients' credit as a good indicator of future risk. They claimed that it was a better predictor of future accident claims than someone's previous driving record.

    If that is true, then I can certainly understand how a credit rating may be a decent indicator of a potential employee's reliability. I doubt it would be the only factor in deciding to hire someone, but if you had two otherwise equal candidates, where one has an excellent credit rating, but the other consistently misses bill payments, racks up huge credit card bills, etc., wouldn't that be a relevant point of discrimination? What if you were hiring someone to be a project manager? Wouldn't personal finance habits be a good indicator of how well they can manage a $200,000 account? Not always, but... put yourself in the employer's shoes.

    As for privacy, remember, this is your employer - they will already have your SSN on file, they know your salary, how many medical claims you make against your medical plan, probably even what prescription medications you're taking. They know how much tax you pay, they can see what type of car you drive; they have your address, home phone number, spouse's name, dependents' names, how much you're contributing to your retirement savings, and a whole lot more if they put any effort into looking. Why is it that you're afraid of a credit check?

    I always thought I was paranoid, but I wouldn't hesitate to give my employer permission to do a credit check, probably because I expect it would be spotless, and it might give me an edge over another candidate.
  • by AnalogDiehard (199128) on Thursday February 06, 2003 @05:01PM (#5244752)
    My soon-to-be-ex-wife ruined my credit history behind my back. To make a long story short, I have $20,000 in credit card theft (marital debt and I'm stuck with it!), an identity theft alert when she was caught attempting to open another card in my name while they were trying to serve papers against her, and collection notices when she neglected the bills while she was flying around the country seeing boyfriends behind my back. This was not a happy experience and is not anything I would wish on my worst enemy. I even have to take the drastic step of applying for a new social security number because it is in her hands where she can do more damage with it.

    Privacy issues aside, the danger is too great that interviewers reviewing my credit history would make the wrong assumption that I incurred all that debt and that I would lose the job offer without being given any chance to explain the report. I would simply tell the employer that my credit history has suffered severe damage from my spouse and that I have no choice but to vigorously protect that information. If they protest further I will simply state that I am not open to negotiations on that topic.

  • by brer_rabbit (195413) on Thursday February 06, 2003 @05:27PM (#5244807) Journal
    ...people who cannot manage their own finances may not be good employees, or that those with troublesome credit may be more likely to steal from the company...

    Are you kidding? The only reason I've got good credit / finances is because I steal from the company.

  • by drteknikal (67280) on Thursday February 06, 2003 @05:28PM (#5244817) Homepage
    I thought that any conditions upon which employment was contingent had to be disclosed prior to hiring. Every time I've taken a job, the various invasions of privacy to which I'd be subject were known before I got there.

    It might be worth checking with a lawyer -- not to see whether the requirement is illegal, it's not, but to see whether the requirement can be enforced when it was not disclosed prior to hiring.
  • by tmoertel (38456) on Thursday February 06, 2003 @05:31PM (#5244838) Homepage Journal
    First, I am not a lawyer. If you want advice you can trust, talk to one. Now, regarding this:
    On my first day, I was provided with all of the standard employment paperwork ... as well as a document that is to provide my permission for the Company to do a ... credit history check.
    Let me get this straight: They sprung this condition of employment on you after you accepted the job, left your previous job, and arrived for the first day of work? That's outrageous!

    If I were in your shoes, I would say no, politely and firmly:

    I am sorry, but I will not agree to these new terms. We have already negotiated the terms of my employment, and these additional items were not part of our agreement. For you to attempt to change the terms now, after we had agreed upon them, and after I have left a good job with my previous employer, runs counter to established business practice and is simply unethical. As a matter of principle, I must reject these new terms.

    As a courtesy to you and a sign of my good faith, I will consider the whole thing to be a simple mistake and press it no further. I trust this will be the end of the matter.

    If they didn't let the issue drop, I would talk to a qualified attorney. Pursuing the matter would probably irreparably damage your relationship with your new employer. But, then again, if they really pulled something this weaselly, maybe they aren't the good employers you thought they were when you signed on.

  • by Kagato (116051) on Thursday February 06, 2003 @05:43PM (#5244956)
    Okay, here's the deal. You're up the creek with out a paddle for the most part. Most states allow the employer to screw with the employee all they want. That's bad. MANY states make it so you can ONLY screw with people you've offered a job in writing too. So in MN, my home state, no pee spree, no credit check with out a written offer.

    1) Find out if you state allows the screening of applicants.
    2) If declined the Fair Credit Reporting Act requires (Federal Law) requires that:
    a) You are provided with a written letter indicating why you are being declined. They MUST be specific. They can't just say your FICO score was too low.
    b) They are required to tell you where they got the information from
    c) They are required to allow you to dispute anything on the report.

    Complaints can be filed with the Federal Trade Commision. Macy settled out of court with the FTC over Credit reports a few years ago. They weren't telling people why they didn't get the job.

    In one case a CRA had added several extra zero's to a disputed debt. Making the person seem unfit for a management position.

    IANAL.
  • by aquarian (134728) on Thursday February 06, 2003 @05:53PM (#5245067)
    If the salary for the job in question is over $150k, there are even greater ramifications of this. They can do a financial background check in addition to what appears on your credit report, and anything they find can be reported to the credit agencies, and appear on your report *forever.* That's right, not 7 years, or 10 years as with bankruptcy, but forever.

    The moral of the story is that in this age of high profile corportate corruption, etc., companies, ehareholders, and government agencies are doing whatever they can to protect themselves. In the wake of the Rafael Perez and Rodney King scandals, the LAPD even insists on a completely clean credit record for its recruits. A bankruptcy or other credit faux pas means no job.
  • by Mulletproof (513805) on Thursday February 06, 2003 @09:35PM (#5247043) Homepage Journal
    The arguments have been made, and rightfully so, that your credit does not nessisarily reflect you as a person or how you will perform in their job environent. Bad times happen and people are forced to make choices to survive those times, credit be damned.

    However, there's another point I haven't seen addressed. Credit companies are sloppy. I know of more than a few cases where it took somebody moving Heaven and Earth to get some error on the companies part rectified.

    Creditor: "You owe $500!! Says so here!"
    You: "Um, no. That was paid. Infact, I have the reciept here."
    Creditor: "Oh! Just fax us a copy and we'll take care of it!"
    You: "ok..."
    ~a month later~
    Creditor: "You owe $500!!"

    These people aren't exactly the pillars of timeliness and accuracy and certainly not a benchmark to be used in employment. Get a criminal record. Urinanalysis. Something. But not credit...

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