Are TARP Recipients Pulling Pre-Employment Credit Checks?
“Credit is a system whereby a person who can’t pay gets another person who can’t pay to guarantee that he can pay.” — Charles Dickens
As I was driving home from work (thank goodness I have a job to drive home from) today, I was thinking about the complete mess our economy is in and how it all started with the implosion of the mortgage industry. Since I have worked in this industry for over 18 years and for all intents and purposes lost my career that had been previously progressing quite nicely, thankyouverymuch, this is a subject that I think about quite a bit.
Specifically, I was thinking about my many former co-workers and employees who are still unemployed. I myself was unemployed for almost a full year. I know several people who have been unemployed even longer. These are not lazy, uneducated or inexperienced people. These people are mortgage professionals. This industry has been hit particularly hard as companies have closed, merged and consolidated.
Still, especially for those of us who have spent our entire adult lives in one line of work, the ideal employment would be with another mortgage lending institution. It’s what we know. It’s where we have the most potential for being successful.
With the playing field of potential employers within the mortgage industry having contracted significantly, hundreds of qualified individuals are applying for each and every opening. During my own job search I went months without so much as a phone call, let alone an interview and I live in a major metropolitain area.
I started to wonder about my acquaintances’ financial situations. I know of several who are in foreclosure or already lost their homes to foreclosure due to their abrupt and prolonged lack of income. I’m sure a lot of them are facing significant financial hardship that I can’t even begin to know the depths of. Some are single parents. Some are taking care of their own parents. Some were close to financial disaster when they were working full time due to circumstances in their lives.
It has always been common practice for banks and mortgage companies to run background checks, including credit reports, on potential job applicants. I don’t know if this is still common practice or not.
The United States Unemployment Rate is higher than it’s been in years. The number of Foreclosures continues to climb. Credit Card Charge Offs are on the rise as well.
If lending institutions are still pulling credit reports as part of their hiring process, and turning away qualified applicants who have less than perfect credit, how is anyone ever going to be able to get back on their feet?
Don’t get me wrong, maintaining good credit and honoring my obligations have always been of utmost importance to me. Having said that, if you found yourself unemployed for two years and it came down to paying for your kids’ groceries or paying a bill, which would you choose?
I would love to know if TARP Recipients are still pulling credit reports on prospective candidates. If they are, would that not be a disturbingly heinous display of hypocrisy, elitism and even discrimination in today’s economic climate? These companies are insolvent themselves! Their insolvency led to the current economic crisis and the American public has bailed them out. How could they possibly continue to judge (if they are) applicants based on their credit history?
Thanks for stopping by!
I feel disheartened to know that the practice of credit checks can be so black and white, especially in these economic times of foreclosure and high unemployment.
Seldom do credit checks factor in human moments of crisis, and I am thinking of my sister here whose medical needs warranted that priorities change in her financial decisions. In life the choices given are not always in our hands, like keeping your house or your health.
If you get an answer for your question I’d like to know if these institutions have continued the practice of credit checks in preemployment screens … I’m guessing they probably do.
I suspect that you are right. I’ll let you know if I find out.
I did find this to be hopeful: July 29, 2009
Banning credit report use by employers
“Especially in a bad economy, job seekers shouldn’t be rejected because of errors on their credit reports…”
http://static.uspirg.org/consumer/archives/2009/07/index.html
I can understand checking the credit reports to get an insight into a person’s character, responsibility, etc., especially when there are a lot of equally qualified applicants BUT I would hope that they are looking at a lifelong pattern here, and NOT something caused by an unfortunate turn of events. Hopefully, if there are good reasons for a less than stellar credit report, an applicant would not automatically be turned away.
I would agree that a long history of significant derogatory credit could indicate some problems with responsibility and that if an applicant’s credit problems are clearly the result of a long stretch of recent unemployment that should be looked at differently.
However, I don’t agree that any prospective employers should have the right to pull personal credit. A criminal background check is a different story.
The bigger issue in this case is that these specific companies themselves have proven to be irresponsible, as evidenced by the fact that we had to give them billions of dollars to keep them in business, so who are they to turn anyone away (if they are) for having credit issues as a result of unemployment that was a result of their lack of responsibility?! The possibility that this is happening is extremely agitating. I have to find out if it is or not.