Are Pre-Employment Credit Checks Justified?

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A bad credit check can mean losing a job or a promotion—and, as reported in Forbes this month, a whopping 47% of employers surveyed by the Society for Human Resource Management say they run the checks. But what do we really know about how credit checks are run, the ways that people interpret them, and their broader consequences for society?

In her article “The Controversy Over Credit Checks in Selection: Using Public Discourse to Gain Insight Into Divergent Beliefs, Concerns, and Experiences,” published in the Journal of Management Inquiry July 2012 issue, Kristine M. Kuhn of Washington State University investigates this widely used but “poorly understood” practice to find out what employers and applicants think and why. From the abstract:

Credit checks differ in many ways from commonly studied selection tests, and little is known about how they are perceived. Here an analysis of almost 1,500 online responses to four different media reports reveals the complexity of issues underlying attitudes toward credit checks. Findings demonstrate the utility of a novel methodological approach for exploring the opinions and experiences of a broad sample of people with a variety of perspectives on a poorly understood hiring practice. Discourse reflected some established themes in applicant reactions theory and also concerns about broader societal consequences. Underlying divergent attitudes toward credit checks were sharp disagreements about individual control and about how employers actually implement credit checks and evaluate reports. Implications for expanding theory and informing public debate are discussed.

Now let us know what you think: are credit checks necessary to screen out bad characters? Are they irrelevant and an unfair invasion of privacy?

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