Read This: Unemployment + Bad Credit = No Job

• Stumble This
• Digg This
• Share on Delicious
• Share on Facebook
• Tweet This

Yes you read right!  If you are unemployed and have bad credit then you have another hurdle to get past:  employers unwilling to higher you because of bad credit.

It’s important to note that this is the kind of bad credit where the potential employee has shown reckless irresponsibility with their financial life thus making the employer unwilling to trust them with sensitive information.  Here in DC, that also means losing a security clearance-even after you’ve received it.  More on that later.

The NY Times article discusses the new trend:

Once reserved for government jobs or payroll positions that could involve significant sums of money, credit checks are now fast, cheap and used for all manner of work. Employers, often winnowing a big pool of job applicants in days of nearly 10 percent unemployment, view the credit check as a valuable tool for assessing someone’s judgment.

Now I know you’re thinking, this is just wholly unfair.  While some employers (like the federal government) may say that they look at a host of factors when making the determination, I cant help but think how much time and access to information from the applicant do they really have in order to make an informed decision.  Will job applicants now have to disclose their financial histories and struggles before knowing if they have the job?  At this point, applicants might as well start putting that information on their resume!

This will only lead to a black hole for the unemployed causing them to get caught up in a never ending cycle as Finking remarked: 

“You can’t re-establish your credit if you can’t get a job, and you can’t get a job if you’ve got bad credit.”
 

It’s surely a frustrating cycle for job hunters and lawmakers are organizing to do something about it:  

“Others say that the credit check can be used to provide cover for discriminatory practices. Responding to complaints from constituents, lawmakers in a few states have recently proposed legislation that would restrict employers’ use of credit checks. While some measures languish, Hawaii has just imposed new restraints.”

This is just another way for employers to cut down the number of applicants they actually have to sift through.  Think about it, more applications are coming in from people who are under qualified, qualified and overqualified for positions.  There has to be a way to cut a few off the top, so in this case, it’s the folks with bad credit and it’s not right.

Let the hiring managers tell it: 

“If I see too many negative things coming up on a credit check, it’s one of those things that raises a flag with me,” said Anita Orozco, director of human resources at Sonneborn, a petrochemical company based in Mahwah, N.J. She added that while bad credit alone would not be a reason to deny someone a job, it might reveal poor judgment.

“If you see a history of bad decision-making, you don’t want that decision-making overflowing into your organization,” she said.

While I understand their concerns, you can’t paint all people with bad credit with a broad brush.  This puts them in the nasty predicament of a never ending cycle with the only way of getting out before getting a job is to plead their situation at the end of their resume before the hiring manager procceses the credit check.  I think they should look at each applicant based on their merits and then if bad credit becomes a serious issue (continued reckless use of credit with no attempts to repair it) then it might warrant a sit down.

The federal government uses the following to determine if someone should lose their security clearance even after receiving it:

Employees should be aware that security clearance adjudicators consider the following when making decisions in cases involving unpaid debts:

– Are the financial problems largely beyond the individual’s control?

– Is the person receiving financial counseling and/or taking other responsible action to help resolve the problem?

– Is the person making a good-faith effort to repay creditors?

Adjudicators don’t just look at the amount of debt; they look for patterns of irresponsibility and dishonesty, as compared with patterns of responsible and honest behavior.

“Proactive efforts to recognize and deal responsibly with emerging financial problems are indicative of responsible, honest and trustworthy behavior,” officials said.

That makes more sense to me and I think private companies should follow suit.  Furthermore, if employees find themselves in a bad predicament then the federal government advises that they should take the following steps (applicable to the rest of us as well):

– Advise their security office of the current financial situation;

– Take advantage of the Employee Assistance Program offered by their local human resources office;

– Contact the National Foundation for Credit Counseling, a national non-profit credit counseling network, at 800-388-2277 or visit www.nfcc.org;

– Contact Military OneSource, which offers access to credit counseling services to military families, at 800-342-9647 orwww.militaryonesource.com;

– If in the military, contact Military Aid Society, which offers interest-free loans and grants for financial emergencies. Contact Army Emergency Relief at   www.aerhq.org; Navy-Marine Corps Relief Society at www.nmcrs.org or Air Force Aid Society at  www.afas.org;

– Retain copies of all correspondence between creditors;

– If failed to file an income tax return by the due date, file the return now even if it’s late and they are unable to pay.  Certain service members, such as those who have been deployed, may be eligible for an extended filing deadline and/or a deferral of payment;

– Become educated on current financial situation and the “debt load” that can be afforded.

The lesson?  Now isn’t the time to dodge your creditors.  Work out a plan with them to make good on any debts and visit www.creditboards.com for help with specific credit issues, they are very helpful.  PlanetFeedback.com is also another very helpful tool Ive used in the past to communicate with creditors about past debts and having them removed.