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Are your finances any business of your employer?

by J. Money on Monday, December 13, 2010

personal finances?What if your boss pulled your credit? I was talking with a friend the other day on this, and he was pretty adamant that it’s just plain “F’d up” (his words).  But is it?  At first I was totally on his side, but then as we talked it through a bit I did kinda see the reasoning behind it.  (Although I’m still not sure which side I belong on)

If you have sucky credit, chances are you’re not that well organized.  Or even worse -  you just don’t care. Both of which are not prime attributes to a good work ethic and probably get you to the bottom of the resume pile.  Of course, there are plenty of exceptions to the rule, and plenty of people who have excellent credit that are just plain dicks ;)

So I don’t think it should be the determining factor whether someone gets the job or not, but I guess it does help separate the applicants out a bit.  It would be easier to choose between two equally qualified individuals if one had much better credit than the other, yes?

Now, what about debt?  Or savings?  Do you think your boss has the right to know whether you’re awesome at it or not? It probably depends on what type of debt you had (student loans would show you WENT to school which is good! haha… but maxed out credit cards would probably be something you’d want to hide from the CEO), but unless you’re spouting it around I’m not sure how they’d find that out anyways.  Actually, I take that back!  If you’ve got debt collectors hounding your every move, they WILL call your work place!  So def. be careful of that…. I’ve answered some of these calls before, and it does NOT bode well for anyone.  Best thing you can do here is to get all goody-goody w/ the person answering these calls and make sure it doesn’t get escalated ;)

I will say that you can use a lot of this stuff to your advantage though.  Every now and then I drop hints about 401(k) and how important saving is to other colleagues of mine (within earshot of the big man), and it seems to be doing some good ;)  I’ve been getting a lot more financially-related tasks handed to me lately, and even a nice compliment the other day that I’m a “respectable young man.” Hah!  Did he see the mohawk?  And I know for a fact our company doesn’t check credit or any of that stuff (we’re still a start-up and it would be MY JOB to do that *if* we ever went that route) so for all they know I could have $200k in debt. Which goes to show that it’s all about impressions!! If people think you’re one way, it doesn’t really matter whether it’s true or not.

When it comes down to it though, the best way you can avoid all financial discrimination whatsoever is to keep workin’ hard and rockin’ that money. You get that on lock, and it doesn’t matter whether your credit or debt or anything is pulled out or not.  At that point, it might even be in your best interest that it is!

What do you all think about this?  A bunch of crock, or a bunch of smarts?

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{ 32 comments… read them below or add one }

1 Andrew December 13, 2010 at 7:49 am

I don’t think it’s any business of the company what credit I have, but also, I think they can use any available information to decide whether or not to hire me. So yeah, my views are odd.

I wouldn’t check credit, I’d look for the two most important things:
1) Are they capable of doing the job.
2) Are they decent and friendly enough to work in a team.

As for debt collectors, if I ran a business and got a call about an employee I’d probably say “I don’t care, it has nothing to do with me, it’s between you and , don’t ever call me again.”

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2 Andrew December 13, 2010 at 7:52 am

hmmm, your blog automatically filters HTML tags, a good security measure ;)

It’s supposed to say “between you and NAME” but I put around NAME.

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3 Andrew December 13, 2010 at 7:56 am

You win, comment system, you win. I won’t even type them. I used the LESS THAN, and GREATER THAN symbols to surround the word NAME, but it removed the whole thing.

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4 Curt December 13, 2010 at 8:08 am

When you work with other peoples finances (like I do), I think it’s not only a good idea, but probably a bad idea not to. A potential job candidate might interview well, and know how to talk the talk, but if their personal financial house isn’t in order, I wouldn’t want them working with other peoples finances, let alone giving advice!

(My employer pulls credit as part of a background check which looks back up to 10 years, and does so for all new hires).

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5 Moneycone December 13, 2010 at 8:12 am

Unless it is legally required, I don’t think employers should know about your finances… that’s just my opinion! :)

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6 Slackerjo December 13, 2010 at 8:44 am

Considering about 85% of the people at my work don’t have a savings account, including many of the bosses, I don’t think it’s an issue with my employer.

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7 Kevin @ Thousandaire.com December 13, 2010 at 9:08 am

I think employers should gather as much information as possible about job candidates. I expect them to check my credit, go to my facebook page, and yes, even check my blog.

There are no secrets in this world of the information age. If you want people to have a good impression of you, then you better make sure your life is in order.

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8 Matt December 13, 2010 at 9:12 am

At this point i don’t really care what they look at. I’ve already given consent (or signed the document that says if i don’t sign here then hit the bricks) to check my background and test my hair and urine for drugs. I’m not sure if finance played a role in the “background” check or not but I think the whole pre-employment process is cumbersome and invasive. I’m looking forward to the time when I’ll interview myself and determine that I’m the perfect candidate to run my own businesses :)

However, if a company wanted to ensure that an employee would stick around and do anything for a paycheck they might want someone with a load of credit card debt and if you toss in a couple kids and a mortgage, you have yourself a Company Man.

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9 Ramona December 13, 2010 at 9:34 am

Wow, that’s SHOCKING. I don’t think ANYONE needs to know or care what I do with my money. Am I able to do the job? OK. I can do whatever I want with the money, it’s personal.

when hiring someone, I believe it’s a good idea to be careful at many aspects, but their credit situation is surely not something an employer should be concerned with. If I have to hire someone, I care if that someone is prepared to do the job, has the skills and portfolio. I couldn’t care less how he/she spends the money

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10 Mercedes December 13, 2010 at 9:49 am

I knwo that they do check your credit if you are trying to get security clearance. If you have poor credit is throws up a red flag that you may sell some of the “secret” information you are going to be working with to help pay the bills. My father used to do a lot of secret government contracting work and once he got divorced and had to pay alimony to my mother monthly he lost his degree of secret status.

Under that sort of circumstance, I understand the need to run your credit and see if you are in financial straits. I wouldn’t want someone selling some sort of nation secret so they can pay off their credit card bill for the month!

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11 Kim December 13, 2010 at 9:49 am

@ramona

“am i able to do the job?…”

what if you are in charge of a $60 million annual budget (which a friend of mine was before his recent lay-off). does a person in debt/with crap finances *really* have the skills?

i think it’s a slippery slope. i dont’ work in finance, have never been late on ANY bill, but carry way too much debt, mostly due to a tumor in my noggin and an autoimmune disease. sure, i could “explain” that, but would i then be looked over because i might run up their insurance costs?

i think there are too many variables. i had to sign documents stating they’d check my credit for a seasonal position i took. i think it’s the norm now.

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12 Brent December 13, 2010 at 10:30 am

if you need a security clearance they will pull your credit report to see how much debt one has. I know they use it to help measure the risk that one would steal money or do other unethical things (ie: espionage) to repay large amounts of debt. This could be a possibility as to why one would pull it.

I also believe that FICO is a private company and can choose to release their data to anyone they decide and i dont think anyone can do anything about that.

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13 J. Money December 13, 2010 at 10:35 am

@Matt – “However, if a company wanted to ensure that an employee would stick around and do anything for a paycheck they might want someone with a load of credit card debt and if you toss in a couple kids and a mortgage, you have yourself a Company Man.”

Hahahaha…. that is one helluva way to think of it, I Love it :)

@Mercedes/Brent – Yes!! Forgot about that security clearance one…. when the Mrs. applied for it (she got it, yay!!!) we had to fill out this whole financial background document. Actually, I even wrote a post for it – let me go find… okay back. Here it is (you like the title? haha…):

Personal Financial Statements shouldn’t be Top Secret.

@Kim – Tumor in your noggin? Man….scary. Hope things are going as well as they can for you! :)

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14 Michael Senchuk December 13, 2010 at 11:22 am

I don’t think it’s any business of the company either, and if it was part of the application process I’d probably just decline. Truth is, it shouldn’t be used to differentiate between candidates, I certainly wouldn’t. And it’s a huge privacy invasion.

Regardless, even if they did have access to it, it gives them one side of the equation, but they’d have no idea what kind of investment/property portfolio I hold, so it definitely can give a wrong impression.

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15 Evan December 13, 2010 at 12:18 pm

In my business they are forced to check everyone’s credit pursuant to FINRA regulations, but ignoring that aspect….

It is a two way street…if you, the employee, don’t like the application process don’t apply to that particular job.

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16 Jaime December 13, 2010 at 1:14 pm

I don’t think that credit is anyones business. When I was in debt I couldn’t get jobs where they pulled your credit, it was a catch-22 almost. I wanted the job to get out of credit card debt but I couldn’t apply for it because on the application/website they stated they pulled your credit. So how could I get out of debt if they were going to pull my credit and discriminate based on that?

I only had $600-700 in debt, but that’s beside the point. What about those people who want to desperately get out of debt when the companies won’t hire if your credit is crappy? Thankfully not all companies do this and I found a company JCPenney where I got hired,they did a background check but not a credit check, I got out of debt. Thankfully.

Now life is good and my credit is around 665 or so. I’m working on getting that up to the 700s. What about those people who have more than $10k in debt because of a bad accident, student loans, or because they made dumb mistakes in their 20s like a lot of 20 somethings tend to do? You know its very discouraging to have someone check your credit.

I get why companies do it, but at the same time its none of their business. Sometimes there’s a reason why someone is struggling. I wonder how many good people have lost out on jobs because of bad credit when they desperately wanted a job to get themselves out of that. I work for a different company now, and they don’t check your credit either.

But I still plan on bringing my credit to the 700s, my credit in 2009 was in the 500s. Oh yea it was bad. It taught me a good lesson, whether or not I like the fact that credit scores are pulled, its a reality of life. I don’t want to miss out on future jobs so that’s one reason why I’m bringing up my credit score.

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17 Bridget December 13, 2010 at 1:16 pm

One of my current employers (I work 2 jobs) ran a credit check when I was hired. It didn’t bother me at all, but a lot of my friends found that really weird and were seriously bothered by it. I thought it was a bit intense, but I have good credit so I don’t really care.

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18 Ciawy December 13, 2010 at 1:16 pm

I would like to say it depends. I work as a financial aid officer for a school, and they checked my credit to make sure that I did not default on a student loan. In this case I understand why they did that since I talk to students all day about student loans, and tell them over and over again not to default on it.

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19 retirebyforty December 13, 2010 at 1:21 pm

I think your credit matters to your employer. If someone has a huge debt load, he/she may be tempted to do something to make more money. There are stories in the news all the time about some treasurer stealing money from PTA or something like that.

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20 Techbud December 13, 2010 at 1:25 pm

They might find more about you on your facebook page, :) But depending on the job and level of job, it may not be necessary. It’s in the employers best interest to do so. Why not get as much info as possible when choosing a candidate.

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21 Beckey December 13, 2010 at 1:44 pm

I personally think your personal credit history/report is not any of an employer’s business. It may reflect how someone was previously but there is no indicator to show that the person is now financially more informed and working to correct their past. I didn’t know how to handle credit cards when I was first introduced to them, something I learned from my mother who is always and will always be financially broke, but I’ve definitely worked and and taught myself how to be much more financially responsible. I am also ethically strong and would not rob/rip off any employer.

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22 Briana @ GBR December 13, 2010 at 3:05 pm

I think it’s slightly an invasion of privacy. Everyone has a story about debt or their credit, and I think if an employer takes a look at it, they’ll have a bias one way or another.

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23 Yana December 13, 2010 at 4:15 pm

Absolutely not. I believe in financial privacy, and privacy in general for that matter. I’ll disclose what I want to and to whom I want to disclose it; otherwise, it’s none of your business. As far as an employer for whom one already works, it should be apparent whether the employee is irresponsible – financially and otherwise, at least to the extent necessary to determine relevance or suitability for the job. I don’t think there should be any such thing as credit reporting agencies, unless those agencies are required by law to perform a job – not just collect information without verifying it. And people should be able to opt out of being part of those agencies records. Obviously those who want debt would want to opt in, but there are people who don’t play that game. Personally, the only way I can access our household credit information is through Credit Karma, because the agencies will not give us our reports without us giving “proof” of address – even though they sent reports years ago to the same address, and even though they send the denial of our credit reports to our address. I refuse to give them the proof they want, because it violates my financial privacy and could give them information they don’t already have – and don’t need to have.

Another thing is IRS records and tax returns. One thing I highly disapprove of is the aspect of health care reform related to IRS records and tax returns. I don’t want a health care provider to have any connection to those private records of ours. The health care system is the biggest scam in America already, and inviting them to access our tax returns is a horrible invasion.

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24 TeacHer December 13, 2010 at 5:31 pm

This is an issue I truly see both sides of. I think that on the one hand it is an invasion of privacy to pull someone’s financials when considering him or her for a non-financial job, but on the other hand it’s unrealistic that a company wouldn’t use that information as part of the hiring process if they have access to it. Maybe it should be the kind of thing where the company can look at your finances, but cannot discriminate against hiring based on them. Like, if someone was going to hire me, they can plainly see I’m a woman (thus, the information is available) but it’s illegal to discriminate against me in the hiring process because of my gender.

But on the other hand, we all have a much larger degree over our finances than we do over our gender, ethnicity, etc….ahh! Such a tricky issue!

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25 Jenna December 13, 2010 at 5:41 pm

Personally, I think it’s a little too “big brother-y” if they do. Plus, it’s not like they are going to know if there is an error that you are trying to fix or if you are trying to get back on track after getting slightly derailed.

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26 AnonPoster December 13, 2010 at 6:24 pm

I work in a situation where I get to – have to, actually, look at the tax returns of some extremely high profile people. The company I work for does NOT want someone who isn’t stable in EVERY way doing this job. If I were in trouble and thought for half a second that I could find a way to convince some of these people to “assist” me in getting out of debt (if I had any debt, for example), that would be extremely embarrassing for the company, and, while I wouldn’t last long on the job, I could do a lot of damage in that short time.

I also know that at any time, my phone calls can be recorded and I always just assume that my email is monitored while I am at work, whether it is personal or company-related. That’s the price for having a well-paid, stable job that I worked hard to get. No hard feelings – it’s what I expected would be required of me, and if I were the client, I would also expect no less of the company I hired to work with my taxes.

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27 Edward - Entry Level Dilemma December 13, 2010 at 7:12 pm

To me, it’s one of those “nothing to hide” arguments. “If you haven’t committed a crime, you shouldn’t worry about police scrutiny” “If you’re not a terrorist, you shouldn’t be worried about TSA screenings.” Just because I don’t have a bomb doesn’t mean that I want somebody copping a feel.

And personally, I don’t see the connection between your personal financial health and your professional performance. I made a LOT of financial mistakes in college and graduated with over $15k in credit card debt and a credit score of 500. But that doesn’t mean that I’ve ever stolen from an employer, not even paper clips. I’ve paid off 2/3 of that debt and brought my credit score up by 100 points.

I have three acquaintances who have worked in the financial sector. #1 is a CFO, makes $125k/year and deals with multi-million dollar budgets. He is a recovering gambling addict and used to take between $1000-$5000 to Atlantic City EVERY week. He never touched company money for his gambling but when he sought help, he had $100,000 in credit card debt. (yikes!)
#2 sold pot in college and was arrested in college for possession. He went through pre-trial intervention and got the charges dropped. Now he’s a manager dealing with annuities for one of the big banks and is working on his MBA.
#3 was an accountant with a perfect credit score and a volunteer with her local PTA until she embezzled $17,000 to take her kids to Disney World.

Who do you think would have gotten weeded out of their job by checking background and finances?

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28 Doctor S December 13, 2010 at 11:04 pm

It definitely depends on the type of company that you work for, but I don’t see a huge issue if company is doing credit checks on potential employees. Knowing something like that can give an insight into the person no differently than checking the potential employees facebook page (that they probably dont have privatized).

If I’m running a small company, I want to know how a potential coworker handles their cash. Are they casual with it or a frugal mofo? It all plays in evaluating how a person fits into a specific company.

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29 Jennifer December 14, 2010 at 4:15 pm

Interestingly enough, you can’t get federal grant funding for research if you’ve defaulted on a federal student loan. I see the rationale behind this. Federal student loans are funded by taxes, as are federal grants, so if you’re not putting back, you shouldn’t be able to take out.

That being said, I don’t see the rationale of companies running credit checks on potential employees. I think someone’s personal life can look much different from someone’s professional life. There are people who might be quite good at creating and keeping corporate budgets, but can’t manage their own money. The difference between the two is that *it’s your job* to create and stick to corporate budgets, but no one pays you to keep track of your own finances.

I think it’s a form of discrimination, especially during these difficult times. I’m sure there are people who had great credit at one time, but all it takes is a cancer diagnosis, a pink slip, and/or suddenly becoming sole caregiver to an aging parent to tank your credit. Even the best budget keepers can’t pay $1500 in medical bills per month if they’re only pulling in $30,000 per year. And considering that I think it’s illegal for employers to ask someone their age, health status, or anything else about their personal life, the employers have no way of knowing that tanked credit has to do with the fact that the potential employee’s child needed radiation therapy for a full year. And I don’t think potential employees should be forced to disclose that information, either.

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30 Pretty Unfamous December 15, 2010 at 10:17 pm

I have had my credit checked for two jobs: one is my “career,” where I work in a county government position. The other is for a side teaching job. I understand the credit check for the county job was part of my background investigation, and I was prepared for that. I don’t think the credit check for my teaching position was any of their business, whatsoever. Criminal background, yes, but credit, no.

And when THEY are the ones paying ME, really does it matter what kind of credit I have? If I’M the one paying THEM, yes, I think it’s important for them to establish my credit history. But otherwise, no.

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31 Kay Lynn @ Bucksome Boomer December 16, 2010 at 8:10 pm

I’m amazed how many commenters are okay with employer credit checks. I can understand it being needed for certain jobs; but not in general.

I read somewhere a few months ago that long-term unemployment had left some people with bad credit reports and it impacted their ability to find new jobs.

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32 J. Money December 16, 2010 at 9:48 pm

Ouch. That sucks :(

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