80% of Workers Unaware of Link Between Poor Credit, Job Offers

While most people know a weak credit score can hurt their chances of getting a home loan, just 20% of your job candidates know that a bad credit score can harm their chances of getting a job.

According to a new Visa USA survey, the overwhelming majority of today’s job seekers have no idea that many employers have made checking a credit score part of the job application process, similar to drug testing or criminal background checks.

Jason Alderman, director of financial education for Visa USA, points out that “a bad credit score can send an otherwise well-qualified job applicant straight to the unemployment line.”

In fact, this is entirely legal under the Fair Credit Reporting Act.

Still, the Privacy Rights Clearinghouse contends that this law contains loopholes that employers can use to avoid notifying the applicant that negative information in the background investigation resulted in their not being hired.

The Visa survey finds that 52% of Americans mistakenly believe it is illegal for prospective employers to use credit scores as a hiring criteria, and 28% are unsure.

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Visa’s survey of 1,000 adults nationwide shows that 42% of consumers 18 and older have never even checked their credit score.

The survey also shows that more women (59%) have checked their credit score than men (51%). Adults age 55 and up have checked their score at a far lower rate (43%) than those under 55 (62%). And only 22% check their credit score once a year.

About 18% check their score two or more times each year.

Visa released the survey results as part of the educational initiative What’s My Score?, a program to improve the financial literacy level in America.

Elaine Rigoli has nearly 15 years of experience managing content and community for various B2B and consumer websites. Elaine has written thousands of business and technology articles and has been quoted in The Wall Street Journal and eWeek, among other publications.

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5 Comments on “80% of Workers Unaware of Link Between Poor Credit, Job Offers

  1. I would take this with a large grain of salt. The reason 80% of people are unaware of this “risk” is because 80% of people are not “at risk” for this happening.

    Especially in IT and Engineering fields where competition for the scarce talent is intense. Second – many people in various tech fields are only now recovering from serious financial damage that began during the telecom and internet bubbles.

    Thirdly, the article represents the mindset of a previous era where the job market was closed and the hiring process was a two way street.

    No doubt this goes on, but for the majority of people, I think it is a non story.

  2. On second read, I would consider labeling this story propaganda.

    We are in the midst of a serious credit crisis in many parts of the US and there are serious concerns about the ability of people to repay their mortgages.

    If I was Visa, this is what I would think:

    Uh oh, this housing market looks bad. If people begin to default on their mortgages, they could lose their homes. If they lose their home, their credit is destroyed and if their credit is destroyed, they may not feel the need be so punctual with their monthly credit card payment – after your forclosure takes you from a 730 to a 520, whats another 20-40 points from a late or defaulting credit account.

    Oh…$%@#!!!!!!!

    This could get ugly for us.

    Hey – why don’t we let people know that messing up their credit won’t just mean annoying phone calls and excess mail, it could mean something really serious!

    Like…?

    Hmm – what if you stopped paying your bill and suddenly became totally unemployable?

    Sure, you would not be able to pay us, but you stopped doing that anyway – and if you aren’t going to pay us back, we really don’t think you are entitled to participate in the job market.

    Get the big three on the line! I got an idea!

  3. While I found this release from Visa to be very interesting, I think someone neglected to do their homework. It is my understanding that it is impermissable to use an individual’s credit score to establish suitibility for employment. While a credit report is within the boundaries of an acceptable screening criteria, the actual score is a no-no. That is why the credit bureaus offer a Consumer Credit Report which can be utilized and evaluated for extending credit and an Employment Credit Report which does not include the credit score or account numbers.

  4. Just wanted to note that the people I think didn’t do their homework on this release were the people at Visa, not the individual who published this post.

  5. HI-Just happened to see this article-Nick’s posting is 100% correct-there is no credit scorea and VISA go this wrong-but there is a “credit history.” Here is a column form the ESR Newsletter at http://www.ESRcheck.com, that explores this Urban Myth:

    An Urban Myth can be described this way; “legends are a kind of folklore consisting of stories often thought to be factual by those circulating them. Urban legends are sometimes repeated in news stories.”

    On September 13, 2007, VISA USA issued a press release with the headline: “Americans Unaware That Employers Can Legally Refuse to Hire Job Applicants With Low Credit Scores.” The story said that, “the vast majority of Americans do not know that a bad credit score is more than just a barrier to getting a loan — it may also keep you from getting the job you want.”

    http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/www/story/09-13-2007/0004662292&EDATE

    The problem with the story? It is just not factual. The plain fact is that employment credit reports simply do not contain a credit score, since there is no validity in studies that suggest a credit score bears a relationship to employment. It is, of course, fair to say that employers can access an employment credit report which can contain elements of a credit history, so that meeting obligations may be helpful for employment. But to say the credit score is used or provided is factually incorrect.

    Unfortunately, the story was then repeated as though accurate in another Bay Area newspaper. The problem with such inaccurate information of course is that it can only cause consumers to suffer unnecessary worry and anxiety. In addition to any other worries, consumers with low credit scores may now think they must worry about employment as well.

    Fortunately there was one reporter who saw through the Urban Myth and exposed it for what it was. Columnist Brian O’Connor of the Detroit News set the record straight that employers do not get credit scores and that the credit scores are meant for credit risk and not employment. His advice: “So any job-hunters out there can stop worrying about whether last month’s late utility bill will keep you out of work.”

    http://www.detnews.com/apps/pbcs.dll/article?AID=/20070915/OPINION03/709150334/1010/BIZ01

    The bottom-line: VISA USA does a commendable job in bringing financial education to consumers, but even they fell for this urban myth. It demonstrates once again that background checks and hiring are complicated subjects that are heavily regulated and present a number of potential traps for the unwary.

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