Are Credit Checks Necessary?

I’m a believer in background checks, but as with many things -- it depends on the context. Am I going to run a background check on a neighbor who’s brought me some freshly baked cookies? Or a harmless professor who’s given me a bad grade? Probably not. But if I’m a manager of any business, including rental properties, it would be unwise to not perform some kind of background check. But then again -- depending on what business we’re in -- we need to consider the kind of background check we’re performing on our potential employees or renters. With renters, it’s smart to run a credit check and criminal background check. After all, we want our rent paid on time and who wants a criminal in our midst? But even so, understanding the details helps clarify the credit or criminal history. It’s not always black and white. In the work environment though, what’s necessary? Certainly some kind of pre-employment screening process which would include a psychological assessment and background check would be important for a safe environment. We need to know if we’ve hired criminals. However a controversial current topic is whether credit checks are important in the hiring market. Perhaps it’s more for the renters, but you weigh in and see what you think.

The argument is that with the difficulty of finding a job in this economy, some are being additionally penalized because of their credit histories. Credit checks have definitely increased over the last several years according to the Society of Human Resources Management although only 13% perform them on all their potential candidates. From an employer’s standpoint, it may give them a window into the honesty of the potential employee. If they’ve been desperate enough to steal in the past, what will prevent them from doing it again? From an employee’s standpoint, they’re trapped if they’re struggling financially with little hope to improve when noone will hire them. It’s the broad generalizations that seem to harm. But then again, who can fault an employer for watching their backs? As with everything in life, decisions are complex and all points need to be taken into account. But with controversy comes lawmakers fighting on both sides. At least sixteen states from South Carolina to Oregon have lawmakers wishing to ban credit checks for those seeking work. And why has this occurred? It all started with Terry Becker, an auto mechanic who couldn’t find work. He couldn’t find work because of the medical debt he found himself in due to a son who suffered from seizures. Obviously this financial history doesn’t reflect whatsoever on Terry Becker as a worker. If hiring employers are unable to distinguish the difference between bad choices and unfortunate circumstances, then they may be too dim-witted to be running the show successfully anyhow (Read full story here).

Background checks are necessary; they allow the employer to make good hiring decisions. Even so, the kind of checking should be considered -- what’s essential for the job -- as a ban of all credit checks may cause more problems in the end. And hand in hand with that is a more personal approach, an interview, where a deeper insight can be gained of the integrity and goals of the hopeful employee-to be.