Another reason to mind is your credit reports is the impact they can have on your job searches. In some cases, you can be denied a job based on a poor score.
If it’s not enough indignity that you have to piss in a cup to get certain jobs, some will also request your credit report. So you could be a fine upstanding, non-drug taking, noncriminal background having citizen but one who’s had a spell of unemployment or medical expenses that tanked your credit report and you might be passed over for your dream job. Or even passed over to stock shelves at some soulless big box store.
They Can Do That?!
They can, and they do, a lot of them do. According to a 2012 report, nearly half of employers run credit checks on potential candidates. And not just for jobs that you might expect, people working directly with large sums of cash like bank tellers or people who work with a lot of private data like mortgage handlers.
According to Credit Advocates, a non-profit that helps consumers with credit problems, a lot of people complaining about this practice are looking for blue collar, low wage jobs like a security guard or retail clerk.
You do have to sign a release allowing the potential employer to run the check. But what do you imagine happens if you refuse? Your CV probably goes right into the circular file. And the employer is unlikely to tell you that your sub-par credit was the reason for the decision. And maybe it wasn’t. Maybe.
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A basic background report on a potential employee is relatively cheap, between $19-50. So if you are trying to choose between a couple of candidates with similar qualifications, the credit check could be the deciding factor.
With nearly half of employers checking reports, the credit reporting agencies are making bank pedaling these things. And you can imagine how they position them to employers. They could be stealing from you! They could be selling your corporate secrets to the highest bidder!
I’ve worked in retail, and even managers were subject to bag checks when they left at the end of their shift. Not random checks either, every time you clocked out a co-worker was allowed to paw through your bag for pilfered merchandise. Also seeing the tampons or sex toys or whatever other private things you might be toting around that day.
So pilfering goods seems unlikely and I don’t know what corporate secrets Walmart is harboring that might be up for sale. Using child labor to produce your poorly made crap, paying workers less than a living wage, and chasing competitors out of the marketplace while filling your coffers with corporate welfare are not exactly secrets. Just SOP in Bentonville.
You Don’t Get To Explain Yourself
You could have a weak credit report because you are an irresponsible jackass who bought lots of crap you couldn’t afford. But you could have one because you lost your job in a layoff, ran through your emergency fund before you found another and had to live on your credit cards.
Or maybe you had no health insurance and were bankrupted by medical bills. Even if you do have insurance, you can be bankrupted this way. Medical bills are the number one reason for filing bankruptcy, surpassing credit card and mortgage debt.
Maybe you foolishly but good-heartedly co-signed a loan or credit card for a friend, lover, or relative you shouldn’t have.
It’s unlikely that you’ll be given the opportunity to explain any of these extenuating circumstances because it’s unlikely that you’ll be told you were turned down because of your credit.
And the criteria by which you were deemed not fit for the job might not even be correct! The Federal Trade Commission did a report that showed that one in five Americans has mistakes on their reports.
And maybe some of the stuff on your report you would rather not explain. Maybe you have a fancy underwear fetish. Don’t we all ;). Your Victoria’s Secret habit will show up on there if you use their branded card. So shop incognito with cash or a non-branded card if you’d rather an employer not have access to your proclivities whether they be of the lingerie variety or anything else.
It’s Not Legal Everywhere
Currently, ten states restrict the practice. New York City outlawed the practice just last month. If anyone needs a job, it’s someone who has had credit trouble. Imagine the frustration of trying to do the right thing, getting a job so you can pay off your debts and be a good American consumer in a responsible way and not be able to because of your past sins.
In a country that loves a comeback and adheres to the “boot straps theory” of bettering yourself like nowhere else, it seems grossly unjust that past mistakes should disqualify you from fixing your mistakes.
What Can You Do?
First of all, check your credit report, not just the score, for mistakes. As a condition of the Fair Credit Reporting Act, you are entitled to a free copy of your report from each of the big three reporting agencies, Equifax, Experian, and the TransUnion, once a year.
The best way to do it is to request one from each every four months. They won’t all have the same information so get one from each. Mistakes can be down to lots of things, someone with a name similar to yours or just a clerical error. You can go here for information on how to go about correcting any mistakes.
If you have damaged your credit, through irresponsible spending or a situation beyond your control, (we don’t judge at LMM.) You’re here to learn how to not repeat mistakes, and that’s all we care about) there are ways to at least bring your score up. The black marks won’t fall off your report for seven years, but you can improve the score sooner.
Everyone makes mistakes, and everyone deserves a fair chance to get things back on track.