More Employers Checking Whether Credit is Due: Job Seekers Find Vicious Circle: With No Job, Credit Suffers; With Bad Credit, Em

Sep. 4--Missed a credit card payment? That might keep you from landing a job.

Increasingly, employers are adding credit history to the list of background checks for applicants even when the job has nothing to do with handling money. The practice has sparked debate over whether paying bills on time is a good indicator of a person's ability to do a job.

Cleveon Hughes has been looking for a job for six months. Despite the recession, he said, one of the biggest hurdles is not the lack of jobs but his lack of good credit.

The St. Paul man lamented recently that he couldn't fix his credit history -- marred by unpaid hospital bills and missed credit card payments -- until he had income. But a dearth of income is keeping his credit score low.

"A few years ago they weren't doing that," Hughes said of the credit checks.

For job seekers with a blemished credit history, it's a vicious circle, credit check critics say. The lack of employment keeps them from paying off bills. They stay unemployed as employers increasingly pull credit reports as a way to screen job candidates.

The Society for Human Resource Management says about four in 10 organizations it surveyed in 2006 ran credit checks on potential employees. That was up from about two in 10 in a similar survey in 2004. New data are expected in a few weeks, and anecdotal evidence suggests the numbers will be higher yet.

A pushback is under way. Congress is considering amending the Fair Credit Reporting

Act to ban the use of credit checks in employment decisions. Washington state and Hawaii have restricted the use of credit information in hiring decisions; Wisconsin is considering such a move. Minnesota lawmakers have yet to take aim at credit checks.

As president of Auriton Solutions, a nonprofit organization in Roseville that provides free credit counseling, Tiff Worley hears from plenty of job seekers who are worried about their credit reports.

"Five to 10 years ago, it wasn't much of an issue at all," Worley said. "Today, it's increasingly an issue."

A credit check is just one more obstacle for people trying to navigate the "complex and little understood process" of making it to a job offer, he said.

In some cases, a person's credit history gives employers an unfair picture of the person's sense of responsibility, said Karen Kodzik, a career consultant and owner of Cultivating Careers in St. Paul. A job seekers' credit rating can be negatively affected by debt the person shares with a spouse, for instance.

"How is that a fair assessment about how responsible someone is with money if your credit rating isn't solely based on you?" Kodzik asked.

For many jobs, the issue simply is not relevant.

Going through a temporary services firm, Hughes said, he was told he had to undergo a credit check before he could land a job interview. Hughes, 40, decided to skip it.

"I know I have bad credit," he said. "It just seemed like a waste of time."

Hughes has been a cook and has managed a restaurant. He's looking for restaurant management jobs as well as light industrial jobs such as forklift operator. But he skips job postings at companies that ask for a credit check. That decision further limits his options in an economy where the Minnesota jobless rate hovers at a 26-year high.

"What does credit have to do with employment?" he asked. "If I was working, I probably wouldn't have credit problems."

Employers don't receive the same information lenders do when they receive reports from credit bureaus. For one, the reports exclude the credit scores lenders see. Employers will see loans the person has taken out and payment history.

Experian, a credit bureau that sells credit reports to lenders and employers, advises employers to look at the credit report as one piece of information to be used in their hiring decision.

"They are trying to look and see is this a reliable, dependable person, and how you fulfill your debt obligations is an indicator of that," said Michele Bodda, vice president, product management and development for Experian Credit Services.

Kodzik tells her job-seeking clients to make sure they know what is on their credit report and to clean it up if there's inaccurate information, given the chance their credit report might be pulled by prospective employers.

"You don't want that to be the deal breaker at the end of the day," Kodzik said.

The Golden Valley-based company Certes Financial Pros pulls credit reports on job candidates. The company places finance and accounting professionals on temporary projects or in permanent employment at companies. Employers who hire Certes sometimes do credit checks, too, using outside screening firms.

A blemish on a report doesn't automatically knock someone out of the running for a job, but it does raise a red flag. "It would create another conversation," said Rebecca Baumgarten, Certes' director of operations.

In one case, a woman who interviewed with Certes had lost her job. Her husband was laid off, too, and the couple filed for bankruptcy. The job candidate explained the situation. "In today's environment, things like that are happening," said Sally Mainquist, the company's chief executive officer. Though Mainquist said the situation didn't eliminate the woman from contention, the company ended up not placing her.

Corinne, who asked that her last name not be used for fear it would harm her chances of finding a job, had worked in law offices for 26 years before being laid off by a law firm in August 2008. Having piled up debt to make home improvements, she could no longer pay her bills.

She was up for a data entry job in a legal department at a corporation but after she learned her credit would be checked, she knew she had no chance. "They said they wanted someone with good credit," she said.

"There's always going to be something, but the problem with having a bad credit report is that if they are checking credit you won't be able to get in the door," Corinne said. "You won't even be able to explain your situation and it's left up to their imagination."

Julie Forster can be reached at 651-228-5189.

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