It seems like ancient history when credit was plentiful and everyone could have some. It was the adult equivalent of everybody getting a trophy. You didn’t even have to be honest or accurate about your financial status in order to obtain sizable loans. You could embellish about your income. All right, many outright lied about it. They charged, they bought, they went into debt.
So now it is time to pay the piper. And people don’t have the money to pay off the debt they accrued. There are a lot of reasons for it. They are underwater on their mortgage loans. They have decimated what equity they have in their hosues by purchasing designer this, custom that, boats, cars, assorted trinkets and baubles. So now there is a problem. The problem is made worse by the ensuing recession and the employment layoffs that have claimed millions of jobs. Finding work in an economic meltdown is no fun. It is even worse if you have bad credit. And many do.
Increasingly, employers are conducting credit report searches and part of their list of background checks for preemployment screening. As the recent article in the Los Angeles Times attests, those with failing credit are being ruled out as potential employment candidates. Whereas in a better economy employers may have been a little more lenient, the threat of employee theft and fraud makes employers reluctant to higher those with lousy credit history.
The Los Angeles Times article tells the story of people who are struggling to find new jobs in this economic downturn. The article discusses how some people are not aware they are giving permission for a credit search since the relevant language is embedded in the paragraphs where they sign off. As with the more spurious mortgage loans, job candidates are claiming they were snookered, unaware of what they are signing. I suppose the axiom about reading documents before you sign them is cast off to another era. But that is a matter for another time.
The Times article, which is well written and quite comprehensive, explains how nealry half the employers now conduct background checks. The article points to threshold that job candidates must meet, before they are considered for employment.
In the near future, I will be posting an article detailing the pros and cons of credit reports. I will tell you what we, as a background checking service, look for in credit reports. I will explain how we discern behavior patterns and the things we consider when we review employment credit reports with our clients.
For now, let us say not everything is black and white. With respect to credit reports there are numerous gray areas. It helps to be aware of them. But, meanwhile, check them out before you hire.
