Home › Forums › Financial Markets/Economics › Employer’s increased use of credit check
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July 22, 2010 at 11:19 AM #582327July 22, 2010 at 12:37 PM #581305
ucodegen
ParticipantI think the practice of using a credit check on job applicants is questionable. It is justifiable if the position that the applicant is going for requires bonding, certain types of licenses (series 3, series 7), or requires a security clearance. I haven’t seen any proof where there is a correlation between good credit and good job performance. In many ways, the correlation may actually be a ‘reverse’ correlation. A person with a high debt load may actually be a ‘better’ employee because they are living paycheck to paycheck and really need that next paycheck, versus an employee that has over 1 years worth of income saved up.
There is a secondary problem with using a credit report on job applications, where it really is not warranted. It creates a scenario where one financial mis-step can make a persons financial life unrecoverable. After one mis-step, they are placed at the ‘back of the line’ for job applications irregardless of their actual job qualifications.
Finally there is another problem. Current credit reports are not really a measure of credit-worthiness. It is really the measure of the use of credit. A person who buys with cash, or has ‘surplus cash’ will show up poorly on credit reports. This is the same hole that many banks fell into when writing mortgages. They just used the FICO score and did not check if the person could really pay off the mortgage. It is a problem that I have also run into several years ago when applying for an apartment. A credit report on me basically showed up nothing, because I largely buy with cash (if I don’t have the money, I don’t buy it). I ended up showing the apartment management company representatives one of my bank statements.. which had her looking at it for a while. She didn’t understand why, with that type of balance, I didn’t show up on the credit report. I had to explain to her what a credit report really is, and how it works. If you don’t have any debt, particularly if you never had any debt, you will not show up on credit reports.
July 22, 2010 at 12:37 PM #581397ParticipantI think the practice of using a credit check on job applicants is questionable. It is justifiable if the position that the applicant is going for requires bonding, certain types of licenses (series 3, series 7), or requires a security clearance. I haven’t seen any proof where there is a correlation between good credit and good job performance. In many ways, the correlation may actually be a ‘reverse’ correlation. A person with a high debt load may actually be a ‘better’ employee because they are living paycheck to paycheck and really need that next paycheck, versus an employee that has over 1 years worth of income saved up.
There is a secondary problem with using a credit report on job applications, where it really is not warranted. It creates a scenario where one financial mis-step can make a persons financial life unrecoverable. After one mis-step, they are placed at the ‘back of the line’ for job applications irregardless of their actual job qualifications.
Finally there is another problem. Current credit reports are not really a measure of credit-worthiness. It is really the measure of the use of credit. A person who buys with cash, or has ‘surplus cash’ will show up poorly on credit reports. This is the same hole that many banks fell into when writing mortgages. They just used the FICO score and did not check if the person could really pay off the mortgage. It is a problem that I have also run into several years ago when applying for an apartment. A credit report on me basically showed up nothing, because I largely buy with cash (if I don’t have the money, I don’t buy it). I ended up showing the apartment management company representatives one of my bank statements.. which had her looking at it for a while. She didn’t understand why, with that type of balance, I didn’t show up on the credit report. I had to explain to her what a credit report really is, and how it works. If you don’t have any debt, particularly if you never had any debt, you will not show up on credit reports.
July 22, 2010 at 12:37 PM #581928ParticipantI think the practice of using a credit check on job applicants is questionable. It is justifiable if the position that the applicant is going for requires bonding, certain types of licenses (series 3, series 7), or requires a security clearance. I haven’t seen any proof where there is a correlation between good credit and good job performance. In many ways, the correlation may actually be a ‘reverse’ correlation. A person with a high debt load may actually be a ‘better’ employee because they are living paycheck to paycheck and really need that next paycheck, versus an employee that has over 1 years worth of income saved up.
There is a secondary problem with using a credit report on job applications, where it really is not warranted. It creates a scenario where one financial mis-step can make a persons financial life unrecoverable. After one mis-step, they are placed at the ‘back of the line’ for job applications irregardless of their actual job qualifications.
Finally there is another problem. Current credit reports are not really a measure of credit-worthiness. It is really the measure of the use of credit. A person who buys with cash, or has ‘surplus cash’ will show up poorly on credit reports. This is the same hole that many banks fell into when writing mortgages. They just used the FICO score and did not check if the person could really pay off the mortgage. It is a problem that I have also run into several years ago when applying for an apartment. A credit report on me basically showed up nothing, because I largely buy with cash (if I don’t have the money, I don’t buy it). I ended up showing the apartment management company representatives one of my bank statements.. which had her looking at it for a while. She didn’t understand why, with that type of balance, I didn’t show up on the credit report. I had to explain to her what a credit report really is, and how it works. If you don’t have any debt, particularly if you never had any debt, you will not show up on credit reports.
July 22, 2010 at 12:37 PM #582034ParticipantI think the practice of using a credit check on job applicants is questionable. It is justifiable if the position that the applicant is going for requires bonding, certain types of licenses (series 3, series 7), or requires a security clearance. I haven’t seen any proof where there is a correlation between good credit and good job performance. In many ways, the correlation may actually be a ‘reverse’ correlation. A person with a high debt load may actually be a ‘better’ employee because they are living paycheck to paycheck and really need that next paycheck, versus an employee that has over 1 years worth of income saved up.
There is a secondary problem with using a credit report on job applications, where it really is not warranted. It creates a scenario where one financial mis-step can make a persons financial life unrecoverable. After one mis-step, they are placed at the ‘back of the line’ for job applications irregardless of their actual job qualifications.
Finally there is another problem. Current credit reports are not really a measure of credit-worthiness. It is really the measure of the use of credit. A person who buys with cash, or has ‘surplus cash’ will show up poorly on credit reports. This is the same hole that many banks fell into when writing mortgages. They just used the FICO score and did not check if the person could really pay off the mortgage. It is a problem that I have also run into several years ago when applying for an apartment. A credit report on me basically showed up nothing, because I largely buy with cash (if I don’t have the money, I don’t buy it). I ended up showing the apartment management company representatives one of my bank statements.. which had her looking at it for a while. She didn’t understand why, with that type of balance, I didn’t show up on the credit report. I had to explain to her what a credit report really is, and how it works. If you don’t have any debt, particularly if you never had any debt, you will not show up on credit reports.
July 22, 2010 at 12:37 PM #582337ParticipantI think the practice of using a credit check on job applicants is questionable. It is justifiable if the position that the applicant is going for requires bonding, certain types of licenses (series 3, series 7), or requires a security clearance. I haven’t seen any proof where there is a correlation between good credit and good job performance. In many ways, the correlation may actually be a ‘reverse’ correlation. A person with a high debt load may actually be a ‘better’ employee because they are living paycheck to paycheck and really need that next paycheck, versus an employee that has over 1 years worth of income saved up.
There is a secondary problem with using a credit report on job applications, where it really is not warranted. It creates a scenario where one financial mis-step can make a persons financial life unrecoverable. After one mis-step, they are placed at the ‘back of the line’ for job applications irregardless of their actual job qualifications.
Finally there is another problem. Current credit reports are not really a measure of credit-worthiness. It is really the measure of the use of credit. A person who buys with cash, or has ‘surplus cash’ will show up poorly on credit reports. This is the same hole that many banks fell into when writing mortgages. They just used the FICO score and did not check if the person could really pay off the mortgage. It is a problem that I have also run into several years ago when applying for an apartment. A credit report on me basically showed up nothing, because I largely buy with cash (if I don’t have the money, I don’t buy it). I ended up showing the apartment management company representatives one of my bank statements.. which had her looking at it for a while. She didn’t understand why, with that type of balance, I didn’t show up on the credit report. I had to explain to her what a credit report really is, and how it works. If you don’t have any debt, particularly if you never had any debt, you will not show up on credit reports.
July 22, 2010 at 12:58 PM #581315all
Participant[quote=flu][quote=captcha][quote=davelj]I guess the only reason I “save” is for some unexpected, amazingly expensive emergency – so, it’s a security/sleep-at-night issue. I have no intentions of “retiring” before I’m senile because I really enjoy what I do and should be able to do it until I get close to dying (whenever that might be). Now, I’ll probably have to scale back at some point, but…
If you enjoy what you do and plan on doing it until you’re practically in the grave, “saving for retirement” isn’t really a big issue. More folks should plan on working well into their 70s given our country’s finances.[/quote]
Would country’s finances benefit more from younger lower-paid workers that would replace retirees?[/quote]
Only if you can find someone willling to work for those lower wages and and as capable..[/quote]
Well, sixty five year old postal worker or third-grade teacher with 40 year of experience is likely to be better paid and equally or less capable than a 35 year old person with 10 years of experience.
Also, good for country does not necessarily equals good for one particular company. High unemployment rate among people in their twenties might be completely irrelevant for my company, but it can’t be good for my country. There are very few very experienced people with skills rare enough and relevant enough that any country would care about.
July 22, 2010 at 12:58 PM #581407Participant[quote=flu][quote=captcha][quote=davelj]I guess the only reason I “save” is for some unexpected, amazingly expensive emergency – so, it’s a security/sleep-at-night issue. I have no intentions of “retiring” before I’m senile because I really enjoy what I do and should be able to do it until I get close to dying (whenever that might be). Now, I’ll probably have to scale back at some point, but…
If you enjoy what you do and plan on doing it until you’re practically in the grave, “saving for retirement” isn’t really a big issue. More folks should plan on working well into their 70s given our country’s finances.[/quote]
Would country’s finances benefit more from younger lower-paid workers that would replace retirees?[/quote]
Only if you can find someone willling to work for those lower wages and and as capable..[/quote]
Well, sixty five year old postal worker or third-grade teacher with 40 year of experience is likely to be better paid and equally or less capable than a 35 year old person with 10 years of experience.
Also, good for country does not necessarily equals good for one particular company. High unemployment rate among people in their twenties might be completely irrelevant for my company, but it can’t be good for my country. There are very few very experienced people with skills rare enough and relevant enough that any country would care about.
July 22, 2010 at 12:58 PM #581938Participant[quote=flu][quote=captcha][quote=davelj]I guess the only reason I “save” is for some unexpected, amazingly expensive emergency – so, it’s a security/sleep-at-night issue. I have no intentions of “retiring” before I’m senile because I really enjoy what I do and should be able to do it until I get close to dying (whenever that might be). Now, I’ll probably have to scale back at some point, but…
If you enjoy what you do and plan on doing it until you’re practically in the grave, “saving for retirement” isn’t really a big issue. More folks should plan on working well into their 70s given our country’s finances.[/quote]
Would country’s finances benefit more from younger lower-paid workers that would replace retirees?[/quote]
Only if you can find someone willling to work for those lower wages and and as capable..[/quote]
Well, sixty five year old postal worker or third-grade teacher with 40 year of experience is likely to be better paid and equally or less capable than a 35 year old person with 10 years of experience.
Also, good for country does not necessarily equals good for one particular company. High unemployment rate among people in their twenties might be completely irrelevant for my company, but it can’t be good for my country. There are very few very experienced people with skills rare enough and relevant enough that any country would care about.
July 22, 2010 at 12:58 PM #582044Participant[quote=flu][quote=captcha][quote=davelj]I guess the only reason I “save” is for some unexpected, amazingly expensive emergency – so, it’s a security/sleep-at-night issue. I have no intentions of “retiring” before I’m senile because I really enjoy what I do and should be able to do it until I get close to dying (whenever that might be). Now, I’ll probably have to scale back at some point, but…
If you enjoy what you do and plan on doing it until you’re practically in the grave, “saving for retirement” isn’t really a big issue. More folks should plan on working well into their 70s given our country’s finances.[/quote]
Would country’s finances benefit more from younger lower-paid workers that would replace retirees?[/quote]
Only if you can find someone willling to work for those lower wages and and as capable..[/quote]
Well, sixty five year old postal worker or third-grade teacher with 40 year of experience is likely to be better paid and equally or less capable than a 35 year old person with 10 years of experience.
Also, good for country does not necessarily equals good for one particular company. High unemployment rate among people in their twenties might be completely irrelevant for my company, but it can’t be good for my country. There are very few very experienced people with skills rare enough and relevant enough that any country would care about.
July 22, 2010 at 12:58 PM #582347Participant[quote=flu][quote=captcha][quote=davelj]I guess the only reason I “save” is for some unexpected, amazingly expensive emergency – so, it’s a security/sleep-at-night issue. I have no intentions of “retiring” before I’m senile because I really enjoy what I do and should be able to do it until I get close to dying (whenever that might be). Now, I’ll probably have to scale back at some point, but…
If you enjoy what you do and plan on doing it until you’re practically in the grave, “saving for retirement” isn’t really a big issue. More folks should plan on working well into their 70s given our country’s finances.[/quote]
Would country’s finances benefit more from younger lower-paid workers that would replace retirees?[/quote]
Only if you can find someone willling to work for those lower wages and and as capable..[/quote]
Well, sixty five year old postal worker or third-grade teacher with 40 year of experience is likely to be better paid and equally or less capable than a 35 year old person with 10 years of experience.
Also, good for country does not necessarily equals good for one particular company. High unemployment rate among people in their twenties might be completely irrelevant for my company, but it can’t be good for my country. There are very few very experienced people with skills rare enough and relevant enough that any country would care about.
July 22, 2010 at 5:22 PM #581400four walling
Participant[quote=ucodegen]
Finally there is another problem. Current credit reports are not really a measure of credit-worthiness. [/quote]I respectfully disagree.
If you do not have a credit history then you are not creditworthy.
It is important to finance a large purchase, such as an automobile even though you can afford to pay cash for it. All you need to do is keep making payments on the car for about 12 months then write a check for the balance and pay it off.
When you go to finance a car, the lender does not ask you how much money that you have in the bank and they don’t care.
Financing a vehicle does wonders for your FICO score. I have not financed a vehicle for years, but the credit history of the few that I have in the past makes for a nice looking credit bureau.
Then you are creditworthy.
July 22, 2010 at 5:22 PM #581492Participant[quote=ucodegen]
Finally there is another problem. Current credit reports are not really a measure of credit-worthiness. [/quote]I respectfully disagree.
If you do not have a credit history then you are not creditworthy.
It is important to finance a large purchase, such as an automobile even though you can afford to pay cash for it. All you need to do is keep making payments on the car for about 12 months then write a check for the balance and pay it off.
When you go to finance a car, the lender does not ask you how much money that you have in the bank and they don’t care.
Financing a vehicle does wonders for your FICO score. I have not financed a vehicle for years, but the credit history of the few that I have in the past makes for a nice looking credit bureau.
Then you are creditworthy.
July 22, 2010 at 5:22 PM #582023Participant[quote=ucodegen]
Finally there is another problem. Current credit reports are not really a measure of credit-worthiness. [/quote]I respectfully disagree.
If you do not have a credit history then you are not creditworthy.
It is important to finance a large purchase, such as an automobile even though you can afford to pay cash for it. All you need to do is keep making payments on the car for about 12 months then write a check for the balance and pay it off.
When you go to finance a car, the lender does not ask you how much money that you have in the bank and they don’t care.
Financing a vehicle does wonders for your FICO score. I have not financed a vehicle for years, but the credit history of the few that I have in the past makes for a nice looking credit bureau.
Then you are creditworthy.
July 22, 2010 at 5:22 PM #582129Participant[quote=ucodegen]
Finally there is another problem. Current credit reports are not really a measure of credit-worthiness. [/quote]I respectfully disagree.
If you do not have a credit history then you are not creditworthy.
It is important to finance a large purchase, such as an automobile even though you can afford to pay cash for it. All you need to do is keep making payments on the car for about 12 months then write a check for the balance and pay it off.
When you go to finance a car, the lender does not ask you how much money that you have in the bank and they don’t care.
Financing a vehicle does wonders for your FICO score. I have not financed a vehicle for years, but the credit history of the few that I have in the past makes for a nice looking credit bureau.
Then you are creditworthy.
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