Wanted: All-Star Forklift Driver. Only 700+ Credit Scores Need Apply…

“Wanted: All-Star Forklift Driver. Only 700+ Credit Scores Need Apply.”

Are you serious?  This has to be a joke, right?  If it’s not, give me a break.  Or better, wake up there, ole’ buddy, ole’ pal.  In fact, let me quickly introduce you to a little recessionary data-lemon for you to munch on with your morning coffee:2283852466_JOB_SEEKERSx

  • According to the most recent DOL data, “There are about 6.3 unemployed workers competing, on average, for each job opening.”  Translation: Lots of people are out of work . . . and unless you’ve been sleeping under a rock or haven’t seen a tough day, it’s hard to make all your payments on time when your cashflow hits $0 (unemployment benefits rarely cover what used to be known as the “American Dream”, aka ‘overextend yourself on credit by buying a whole bunch of stuff you can’t really afford, and ultimately live paycheck to paycheck.’)
  • According to the American Bankruptcy Institute, 1,046,499 bankruptcies were filed during the first nine months of 2009Translation: That’s 1 Million potential All-Star Forklift Drivers down the drain.  Maybe there is some link between bankruptcies and warehouse forklift crashes.  I doubt it.
  • A recent Equifax study shows that one late auto payment reduces your credit score by an average of 100 points.  “The national average credit score for consumers with no late auto payments is 703, while the average score for consumers with at least one late payment is 605.”  Translation: A single missed payment can cost 100 points.  Yep, you might lose that ‘perfect job’ due to a single late auto payment!

While the above statistics only scratch the surface, It’s pretty easy to look at the data and see the massive credit problem we’re having in the U.S.  (For that matter, I can’t imagine what a credit check on the U.S. Federal Government would look like!)  The simple truth is that credit issues have become relatively widespread, and FICO scores don’t tell the whole story – it’s a number, not a felony conviction.  For example, what about a newfound single-mother who is recently divorced?  What about someone who was under-insured, now facing hundreds of thousands of dollars in medical debt they thought would be covered? I guess you’re out of luck if you’ve survived cancer, right?  Sorry for the reality check, FOT Nation.

And here’s where it really gets ugly: U.S. Representative, Steve Cohen, of Tennessee, found that many of the credit challenged were “young people, seniors, minorities, and divorced women.”  Ok, so maybe ‘young people’ and ‘divorced women’ don’t constitute a protected class . . . but you’re playing with fire in regards to ‘seniors’ and ‘minorities’.  Roll the disparate impact dice too many times and you just might come up with snake-eyes.  And still, according to SHRM’s “2004 Reference and Background Checking Survey Report“, 35% of surveyed firms check candidates’ credit reports, compared with 19% in 1997.  (Current survey data is not available, however if you’ve seen the explosion of vendors and ramped-up marketing efforts of the credit checking industry, it is safe to assume an increase above 35%.)

Look, I understand that in some cases, there is a direct correlation between someone’s credit history and the potential of fraud or theft.  However, those cases are the exception and not the norm.  At the end of the day, there are a good number of Americans today who have challenged credit histories due to a layoff, divorce, identity theft, death of a spouse, medical catastrophe, etc.  Before you’re so quick to toss someone’s candidacy into the rejected pile due to a credit check, take a few extra moments to find out why.  After all, your next All-Star Forklift Driver just might have a very good reason.

P.S. You know the pendulum has swung too far when you can not only check credit, but also do a “net worth check” on your upcoming date tonight! (I’m not kidding – check out the Intellius Date Check app here.)  The pendulum will surely swing back again, but the question is when.

FOT Background Check

Josh Letourneau is the owner of Knight & Bishop, an Executive Search and Human Capital Intelligence firm, with an emerging focus on Social Network Analysis (SNA). Nope, not like MySpace, but more like who is connected to whom in organizations and how does that impact their influence on decision making and P.O.V.s. And you can learn more about all of this on his new blog .

6 Comments

  1. Mike Coffey says:

    When I was on the HR manager side of the desk, I was always dubious of using credit as a predictor of dishonesty. Now, after more than a decade as the owner of a background investigations firm, I routinely try to dissuade clients from even looking at applicants’ or employees’ credit reports. In many cases, I’ve just refused to sell the reports to employers who I believed were going to use them unwisely.
    I have yet to see a study that correlates bad credit and dishonesty.
    Like so-called “national” criminal records and other database-based screening products, credit reports are instant, relatively inexpensive, and easy to sell. They are also full of information that is often neither job-relevant or accurate. The problem is that too many HR folks aren’t educated by their screening partners in the appropriate use of these and other selection tools (personality assesments come to mind).
    While we would all like to have perfect employees without any financial. personal, or professional blemish, they don’t exist. Employers who paint candidates with less than ideal credit or a criminal history with a broad brush will often miss opportunities to add qualified and committed employees to their organizations.
    Smart employers have a plan on how they will evaluate any screening results before they ever order the background check. They make sure the criteria is job-related and that there is a clear business-necessity for any adverse decisions that may be made. That will help keep you out of court and help you build a competitive workforce.
    –COFFEY

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  2. Mike Coffey says:

    PS: I should also point out that employment-related credit reports do not include credit scores. If an employer is seeing credit scores, they are pulling the wrong reports from their screening partners.
    –COFFEY

    Reply
  3. Scrutiny of Employers’ Use of Credit Reports Increases

    The heat continues to rise on employers who use credit reports in making hiring decisions. Workforce Management just ran a piece about stepped up EEOC enforcement actions against employers who use credit reports in a manner that adversely impacts prote…

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  4. Josh, great post.
    – Should employees start asking for credit reports for managers?
    – Should job seekers ask for credit reports on organizations?
    – If a company has laid off workers during the past seven years, does it mean that you shouldn’t work for that organization?
    Stupid. Just stupid.

    Reply
  5. Jenny Hughes says:

    Really interesting post. In SHRM’s 2006 Weapons in the Workplace Survey, 42% of surveyed employers ran credit checks on job applicants. This has become such a hot topic, our research department is working on a new poll looking at this issue now.
    Thanks,
    Jenny Hughes
    media affairs specialist, SHRM

    Reply
  6. I received my first mortgage loans when I was very young and that aided my family very much. Nevertheless, I need the car loan once again.

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