I applied for a job at a gas station in the late 90's. The store manager had to get permission to run a credit check that I needed for the job: The dude explained that folks with bad credit were more likely to steal from the company.
Which isn't true, of course, and they had other ways to check for theft - but this didn't stop them.
I think the burden of proof is in the other direction: if someone is going to use some sort of signal or test to determine if someone is eligible for employment, it is on them to present evidence that the signal/test actually accomplishes the objective they expect it to.
In California, it is illegal to use a credit report in employment decisions (unless the position is in finance/accounting). Clearly lawmakers have decided that this sort of test isn't helpful, and is abused to deny qualified people employment.
No, but they might want to turn away a specific employee for an otherwise protected reason. Don't want to hire a black employee? Run a credit check. Statistically, black individuals have lower credit scores than white individuals. Deny them a job based on their credit score.
While that makes some sense, I'm apparently having a hard time getting over my conception that a private business would ever give the rejected candidate a specific reason they weren't offered the position. Surely this is cultural on my part.
I have no evidence either way, but it is not absurd in my opinion to suggest that people who make poor life decisions in one area of their lives might also make poor life decisions elsewhere.
A bad credit score doesn't really mean you've made bad choices. It just means you had some bad luck.
The reasons for your bad luck can range from medical bills, job loss, missing work when poor (it snowballs) and other such things. It might mean you made a bad decision when you were 18, but it is still hanging around on your credit. You might have been in a financially abusive relationship.
Shit happens, and it is naive to think that you have absolute control over all of it. A few folks simply don't pay, sure, but you can't tell this from a credit report.
And it isn't like you are going to get credit for paying most normal bills on time. Landlords and utilities rarely report positives to the agencies.
And even with all this, it shouldn't realistically mean that folks can't get back up. Most jobs don't need credit checks, nor do most apartments (or at least, limited checks).
> A bad credit score doesn't really mean you've made bad choices.
It doesn't necessarily mean this, sure. But, if we found a thousand people with bad credit scores and did a deep audit, we wouldn't discover 1000 who had unavoidable, unpredictable misfortune. We likely wouldn't even find 500.
> Shit happens, and it is naive to think
I've heard alot of "shit happens" excuses over the years. Few of them struck me as "no matter what this person might have done, they were just fucked from day one". Shit doesn't happen, either in frequency or degree, nearly enough to explain the bad situations many are in. They tend to have alot of minor misfortunes sprinkled here and there among gigantic piles of poor decisions.
>And it isn't like you are going to get credit for paying most normal bills on time. Landlords and utilities rarely report positives to the agencies.
Funnily enough, I work adjacent to a company called Rent Dynamics, and one of the features that they offer is positive credit reporting for those who pay the rent on time. There are others that do this too.
I'm still skeptical of the concept.
Should some company hiring say "sure, he defaulted on that $18,000 of credit card debt 3 years ago, but look... he's paid his rent on time for the last 4 months knowing that if he screws that up he'll be evicted, and that counts for something!" ?
Is that feature worth the slow accretion of extra (and sometimes hidden) fees that are pushing housing/rental prices higher in an era of skyrocking housing costs? Remember, this isn't something that shows up for luxury apartments, it's for the not-quite-slums apartments.
We might find that landlords will do positive credit reporting here in the next few years, and that it's not the good thing you think it to be.
> Should some company hiring say "sure, he defaulted on that $18,000 of credit card debt 3 years ago, but look... he's paid his rent on time for the last 4 months knowing that if he screws that up he'll be evicted, and that counts for something!" ?
No, they shouldn't be looking at this in the first place, because it is -- at best! -- tangentially related to job performance. If you're worried that your employee is going to be distracted by personal financial issues, taking away their option to have steady income certainly isn't going to fix the situation.
> Is that feature worth the slow accretion of extra (and sometimes hidden) fees that are pushing housing/rental prices higher in an era of skyrocking housing costs?
What does this have to do with anything? Housing costs are skyrocketing primarily because of housing scarcity in desirable places to live (where existing residents have enacted policy to restrict further building). On top of that, we have wages that have not been keeping up with inflation, and a general increase in income inequality that helps to push housing further out of reach.
> Funnily enough, I work adjacent to a company called Rent Dynamics, and one of the features that they offer is positive credit reporting for those who pay the rent on time. There are others that do this too.
I actually feel that such companies should not be allowed to report a tradeline.
No company / landlord (and doubly so when you go with, as you say, 'not-quite-slumbs') is offering you rent in arrears. You're paying, in advance, and no credit was extended to you.
To me this is a bastardization of the credit system that's only got potential positive reporting as a side effect. Let's be real, companies like yours real customers are landlords/property managers, not tenants.
Thank you for this comment. You have shared an insight I had not come to see on my own. I doubt I would have come to it by myself.
> Let's be real, companies like yours real customers are landlords/property managers, not tenants.
They are very much so. But if we can help them be more attractive to their customers (renters), then our own products might be more sought after. Or at least that's the theory my bosses operate from.
The point is that a credit report is probably a poor signal of risk when it comes to the kinds of things most employers care about when considering hiring someone.
If you have evidence to support the idea that a credit report actually is a good signal here, then by all means, present it. If not, then the default assumption should be that it's not useful, or at the very least not equitable. We shouldn't be adding qualifications to things based on guesswork.
And in general, we very often legally require companies assume higher risk in various things (including hiring) in the name of anti-discrimination (for one thing). We consider this to be a benefit to society. In this specific case, I want the person who has bad credit to be able to obtain steady employment (and on decent terms; not just one out of the fewer jobs they'd have to take because the others disqualified them based on their credit) because that's pretty much the only way they'll be able to improve their credit. They'll be able to become more financially stable, perhaps be able to buy a home. All of this is a benefit to the stability of society.
The thing that generally pisses me off about attitudes like yours is that it advocates for a system where when you do one thing wrong, you get further restricted in ways where you're guaranteed to do more wrong things, and every step you take -- even steps taken in good faith, in seemingly the right direction -- makes it harder to dig yourself out from under the mess.
I've found that the people with these attitudes are usually those who have either a) never experienced much in the way of hardship, or b) are one of the rare cases who managed to dig themselves out, despite all the adversity, and now have a chip on their shoulder that makes them advocate for continuing to make it hard for everyone else.
> If not, then the default assumption should be that it's not useful, or at the very least not equitable. We shouldn't be adding qualifications to things based on guesswork.
In a free country, that's for them to decide. I don't think it should be a default assumption. Neither does the government, where excessive debt tends to signal a willingness to commit treason for those who try to get security clearances.
If someone would try to sell documents to the Russians because they carry a x5 debt load of what they should for their income, is it really so ridiculous a concern that they might skim the till for the same reason?
> And in general, we very often legally require companies assume higher risk in various things
Sure, when it's morally the right thing to do, or when it would create perverse incentives if they didn't.
Here? They just won't hire anyone. Self-pay at the pumps, no convenience store at all, or some horrendous gigantic vending machine deal, no employees. That doesn't serve the community, customers, and Mr.-I-Think-Credit-Cards-Mean-Free-Money gets no job.
> The thing that generally pisses me off about attitudes like yours is that it advocates for a system where when you do one thing wrong,
It wasn't "did one thing wrong". It's always "did one thing wrong, then like a misbehaving child decided to do five other things wrong out of spite or for shits and giggles or whatever."
And that behavior's just dangerous to fucking society as a whole.
> I've found that the people with these attitudes are usually those who have either a) never experienced much in the way of hardship, o
Then I'm your counter-example. Grew up on food stamps. Remember living out of a car when I was a kid. Free school lunches. Not just for a little while, first through highschool.
> and now have a chip on their shoulder that makes them advocate for continuing to make it hard for everyone else.
The universe makes it hard on them, and everyone else. Stop expecting others to try to make it easy on screwups.
Which isn't true, of course, and they had other ways to check for theft - but this didn't stop them.