Monday, October 25, 2010

Credit histories can haunt job applicants even without security clearance issue

Michelle Singletary’s Sunday column in The Washington Post, “The Color of Money”, continues a discussion that I noted last week about security clearances, “The latest hiring hurdle: your credit history”, link here.

The Society for Human Resources Management (SHRM) maintains that this is a bit of a red herring (or “poisson rouge”). Only 13% check all employees, but 60% check some employees.

The article goes on to discuss that credit histories are important to lenders (during the subprime bubble, they should have become more important than they were), but shouldn’t be the business of employers until people are going to handle money or face “temptation”.

Instead, FICO and Vantage scores are starting to be looked at a mathematical, “well-ordered” measures of personal worthiness, in some cases.

One solution is to let employing agencies do the credit checking but keep the “hiring” clients out of the BI loop. In IT employment, that would be a good idea and prevent some potential conflicts of interest.

Unnecessary credit checking by employers could set up a vicious cycle, driving the unemployed deeper into debt.

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