March 28, 2004

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Use of Credit Records Grows in Screening Job Applicants

</NYT_HEADLINE><NYT_BYLINE type=" " version="1.0">By JENNIFER BAYOT
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ob seekers know the to-do list.

Rework the résumé, using zippy action verbs like "initiated'' and "negotiated." Scan online classified ads and make sure the navy blue suit still fits. Practice, practice answers to those 101 common interview questions.

But what about checking the credit report?

Employment professionals say companies are screening applicants' backgrounds more often and more thoroughly than ever. The vetting can include credit checks on how much candidates owe and how faithfully they have repaid their debts - information that many people assume only lenders consider.

"As a potential applicant, I would want to know what's in my credit report," said Mallary Tytel, president of Healthy Workplaces, a management consulting firm based in Bolton, Conn.

Jobs providing access to money, from fast-food cashiers to chief financial officers, typically require credit checks. So do jobs with government contractors or jobs that involve handling small, valuable items, like jewelry or electronics.

Credit checks are also increasingly common for jobs that permit employees to enter homes, whether to kill bugs, shampoo rugs or care for the elderly, according to hiring consultants. Many temporary-help agencies and other staffing services also consider credit checks standard nowadays.

"The bottom line is that a bad credit report can now cost you a job no matter how qualified you are," said Lewis Maltby, president of the National Workrights Institute, a nonprofit organization in Princeton, N.J. Employers or screening firms can buy reports from credit reporting bureaus for $10 to $12 each after proving their identities and signing contracts assuring that the reports will be used to evaluate potential employees.

Thanks to the Fair Credit Reporting Act, the regulations for disclosure of credit information are stricter than those involving the release of many records. Criminal records, for instance, are open to anyone, and any employer can obtain a potential employee's driving record as long as the purpose is to confirm information already provided by the applicants, said Robert R. Belair, a partner in Oldaker, Biden & Belair, a Washington law firm that specializes in credit reporting and privacy matters.

Calls for tighter controls on hiring explain much of the rise in background checks, hiring firms said. After the terrorist attacks of Sept. 11, 2001, employers intensified their efforts to confirm applicants' identities, and credit reports can help do that. In addition, after the rash of accounting scandals in 2002, many companies added credit reports to improve their background checks and raise their hiring standards. Some companies say they obtain credit checks to supplement terse references from former employers.

At the same time, however, past lawsuits and federal regulations deter companies from running credit checks unless they are clearly relevant to performance in a certain job, several background screening firms said.

"Denying somebody employment based on late payments is dicey," said Blair Cohen, chief executive of InfoMart, a screening firm in Marietta, Ga. And, so, he said, "you can't run a check on the guy who's just answering the telephone; you have to provide a good reason."

Elimika Reynolds, a waitress and part-time student in Atlanta, said she understood why her history of late payments had made it difficult to land a financial services job, despite her experience as a commodities clerk. "People feel the way that you handle your finances is the way that you handle yourself," said Ms. Reynolds, who is 33. "It's a process of elimination."

But she worried that employers were relying too heavily on the reports and that most job applicants had no idea how seriously their credit could count against them. "There should be a better way to evaluate employees," she said. "It feels like an invasion of privacy."

The credit reports typically track two years of payments on credit cards, mortgages, student loans and other debts. They also list bankruptcy filings, court judgments and tax liens for up to 10 years.

The reports that go to employers differ from those received by potential lenders and consumers. For one thing, they lack credit scores, so that companies cannot use cutoff scores.

They also omit birth dates and any information referring to a spouse. "They could be perceived by the consumer as sensitive information," said Susan Crompton, director of product marketing for Experian, a large credit reporting company. "And really," she added, age and marital status "shouldn't be used in a hiring decision." And in contrast to what happens with credit checks by lenders, employers' requests have no impact on applicants' credit scores.

Employers evaluate the reports in different ways. Some look for a history of timely payments to identify responsible applicants. Others may be wary only of candidates with huge debts and thus a potential incentive to steal, Mr. Cohen of InfoMart said.

What most worries these employers is an applicant who currently has payments overdue. "They tend to see a bankruptcy as less worrisome than a person who is 120 days late," Mr. Cohen said. "The person who is late is under pressure to perhaps do something uncharacteristic."

Still, federal law prohibits companies from hiring or rejecting applicants based solely on their credit. And job seekers whose credit reports include unfavorable information, like a bankruptcy, must by law receive notice if an employer checks their credit. They must also be told if a credit check costs them a job.

Before running a credit check, employers must obtain permission, usually by asking a candidate to check a box on an application. Job seekers can refuse, but their chances of being hired almost certainly end there, employment professionals said. "You don't have to allow a prospective employer to run a credit check, but they don't have to give you the job," Mr. Maltby said.

Career counselors suggest that job seekers check their own credit before applying for jobs. They recommend requesting reports from all three major credit reporting bureaus - Experian, TransUnion and Equifax. Job seekers can correct any mistakes by contacting the credit reporting bureaus and, if applicable, the screening company as well. Because corrections will take some time, job candidates should give prospective employers proof of any errors.

If a report accurately shows problems, the advice from all sides is to take the initiative and explain why. "If there is any negative information to be brought to light, 'fess up," Ms. Tytel of Healthy Workplaces said. "No one likes surprises."

For her part, Ms. Reynolds in Atlanta is restoring her credit by making every payment on time. "As far as my credit is concerned, it is a part of the game," she said. "It's been an eye-opener."

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