Although there isn’t strong evidence linking credit reports with job performance, employers still use them.

When Matt Boswell heard back from Fidelity Investments in August about a remote client service associate role he’d applied for, he was excited. Boswell, who lives in Fort Lauderdale, Florida, had been a stock broker and client representative in financial services for over a decade, and Fidelity was the company he’d always put on a pedestal.

Boswell received a verbal job proposal from a hiring manager after promising interviews. He received an email notice in September about the next stage of the application process. A background agency would request a consumer credit report.

“Should you wish to explain any items that appear on the the report, please contact the undersigned immediately,” Fidelity wrote in an email to Boswell, which HuffPost has reviewed. Boswell must pass a background check before he can be offered a final deal.

Boswell claimed that he owed $10,000-12,000 to creditors. Boswell replied by saying that he is ready to pay any debts.

Boswell stated that his credit problems were a result of an injury sustained in an electric scooter accident that occurred in 2019, which required three facial operations. Prior to that, his credit score was 720. He kept an eye on it in hopes of purchasing a home. After the accident, he placed medical expenses on his credit cards. To pay them off, he also withdrew funds from his 401 (k) and went on medical leave.

From there, it was a cascading downhill event,” he said. “I had some savings, but not enough to pay down my credit and still survive.”

Boswell, who had not been in work since June 2020 was working as a day trader and received financial support from his family when he got a verbal proposal from Fidelity.

“This is a very degrading process. It’s dehumanizing. It’s not something that I like subjecting myself to.”

– Matt Boswell

Boswell believed the explanation that he provided to the background screening agents was enough. Boswell had already been fingerprinted and drug-tested for the job. He assumed that his offer was good and informed friends. On October 10, a Fidelity hiring manager called to inform him that Fidelity could not offer the job because of his credit history, which contained charges-off accounts. This meant the debt was declared non-recoverable.

Boswell said he asked if there was a way to remedy the situation, but “they said that they don’t allow that for my circumstance.”

“It really is distressing, and it leaves you feeling hopeless,” Boswell said of the outcome. “This is a very degrading process. It’s dehumanizing. It’s not something that I like subjecting myself to.”

A Fidelity spokesperson told HuffPost that a good credit check is “especially important when working in the financial services industry. Without a credit or background check, all offers to new hires aren’t final. There is language in all job offers to new hires that a background investigation will be conducted once they accept the job.”

Fidelity could not give details on what a satisfactory credit report would look like.

Credit reports don’t predict job performance. They can however perpetuate inequalities.

Boswell is not alone in finding that credit problems became a barrier to getting a job, though the exact number of people who lose jobs for this reason is unknown because background screeners and employers don’t disclose data. Credit reports were created to help lenders judge the risks with making a loan, but they are now used by an ever-growing number of employers to judge candidates’ supposed trustworthiness when handling money or sensitive information.

This type of employment credit check is common in the financial industry, but it also happens in other industries, according to Chi Chi Wu, an attorney with the National Consumer Law Center that focuses on fair credit reporting. Wu presented legislative testimony on 2019, addressing the problem of credit reports being used for employment purposes.

About one-third (33%) of hiring managers reported that they conducted credit checks for job candidates in 2018, and 16% stated they did the same for all applicants, according to a survey. survey2.137 Human Resources professionals

Several statesCalifornia, Colorado Colorado Connecticut Delaware Hawaii Illinois Maryland Nevada Oregon Vermont Vermont Washington Washington. Except for when it is required by law, or to obtain a national security clearance, legislation banning this practice passedIn 2019, the House of Representatives was unable to pass legislation.

This is because critics believe that the previous research shows they are necessary. no link between credit report data ― such as late payments, debts in collection and charge-offs ― and job performance or termination. TransUnion is the largest credit reporting company. acknowledged in public testimony in 2010 that there was no research to show any statistical correlation between what’s in somebody’s credit report and their job performance or their likelihood to commit fraud.

Yet, belief and practice continue to be held.

“There is still a very strong myth out there that credit reports, credit scores reflect some sort of responsibility, that ability to manage your finances means that you are a responsible, you-have-your-stuff-together person. That’s not true. It’s about luck, circumstance and economic status,” Wu said, citing the racial wealth gap and the legacy of historic discrimination minorities face with redlining and debt collection, which results in lower credit scoresFor communities of color

Boswell is Black and said that credit checks continue to perpetuate the white boy’s club within his industry. “I think it’s ridiculous to not hire people based on credit, knowing that in the atmosphere we currently reside in that you are actually going to be barring many minority applicants,” he said.

Wu said she has heard arguments that hold most employers are sympathetic and understanding of medical debt specifically — it accounts for 52% of collection items on consumers’ credit reports ― but counters with this question: “Why should [prospective employees] have to reveal private medical information in order to have to explain a debt collection item?”

Even if credit reports did predict job performance, Wu said, they shouldn’t be used because it’s too common for them to contain errors. Previous surveyAccording to the Federal Trade Commission, 20% of Americans had credit reporting errors. According to the Federal Trade Commission, 20% of consumers had verified errors on their credit reports. survey by Consumer ReportsA staggering 12% of Americans reported that they had found at most one mistake when reviewing their credit reports this year.

Employers tell themselves stories about how ‘good’ or ‘bad’ credit means something about the ability do a job well.

Traditional jobs are not seen by employers. three-digit credit scoresThey can request reports but they still have a lot to choose from, such as bankruptcy records, student loans information, information on mortgages and student loans, information about car payments and debts that were sent to collections agencies, and details of credit card accounts like balances and monthly payments.

“They are trying to figure out did you not repay because it’s something about you as an individual … or did you not repay because of some big-picture force that was beyond your control.”

Barbara Kiviat (economic sociologist at Stanford University)

The information does not tell a complete story. Hiring managers make decisions during interviews.

Barbara Kiviat (sociologist, Stanford University), whose research included interviewing 57 hiring professionals about how they use credit reports for employment decisions, calls this “moral storytelling.” Kiviat found hiring managers choose to assign blame for unpaid debts to either the person or their situation, and how they pick is subjective.

“They are trying to figure out did you not repay because it’s something about you as an individual and, therefore, I don’t want to hire you because you are going to bring that into my company, or did you not repay because of some big-picture force that was beyond your control,” she explained.

Kiviat describedIn her research, she found that credit reports were the main deciding factor for two of three candidates for school president. Two of the candidates in question were females with bad credit reports, one due to a misforeclosure and one due to a divorce. The candidates each had to explain their situation to a recruiter, which satisfied the recruiter but not the chair of the school’s board of trustees, a banker who refused to hire either candidate.

As the headhunter later explained to Kiviat, “Someone like him, who comes from generation after generation of inherited wealth, has no idea how hard it is to maintain a good credit rating, but he sat in judgment of these women post-2008, and he held that against them.”

Kiviat said that employers don’t pull credit reports only to decide if a candidate is trustworthy. Some employers won’t look at credit history because it is against regulation.

“If you’re a financial institution and you are getting regulated and you need to prove to your regulators that you are hiring financially responsible people, the credit record is an easy-to-understand way to do that,” she said. “In my research, investors sometimes would want to know: ‘Do you run credit on your employees?’”

Here’s what to do if you think your credit will get checked in the hiring process.

Below the Fair Credit Reporting ActWu explained that before rejecting candidates, employers have to provide a report copy.

Wu suggested that job seekers should do their best to help themselves if in such an unfortunate situation. check their credit reportfor mistakes and problems, and to present their case once they receive the report.

“The big ‘if’ is if employers are actually following the law and are giving you the report before they make a decision,” she said. “Oftentimes we find out they gave the copy of the credit report, but they had made their minds up.”

Getting ahead of the story is Kiviat’s best piece of advice. “You don’t want the first time that the employer knows there is a problem to be when they pull your credit report,” she said.

Kiviat said that successfully getting ahead of the story includes a “moral redemption dance” that shows a job candidate is sorry and is taking the debt seriously, but it can also communicate “It wasn’t me, it was the circumstance.” That way, when employers do run the credit check, they are doing so with the candidate’s story in mind.

What is the right time to reveal sensitive information? Kiviat said it’s tricky: Doing so too early can rule a candidate out, so she recommends waiting until the end of the interview stage, when it’s clear the employer will run a credit check.

Kiviat also points out that practical advice on sharing information to get employment is terrible. “I don’t want to live in a world where that’s good advice, but I actually do think that’s good advice,” she said. “It’s not good that people get put in these really uncomfortable situations.”

Boswell said his experience left him “deflated.” He’s working on improving his credit and is weighing a career switch, even though his degree in finance and years of experience in investing make him reluctant to do so.

“I have a unique set of skills that I’ve developed in this industry, that only really apply to this industry. I don’t really know where I go from here,” he said. “I definitely want to work. I want to survive, I want to live, and to do so I need money.”


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