Survey Reveals More than Half of Consumers Want to Ban Credit Report Checks by Employers

More than half of consumers approve of the idea of banning the use of job applicant credit reports by employers for employment screening, according to a recent survey.

A telephone poll survey conducted for Credit.com by GfK Custom Research North America from January 14, 2011 to January 16, 2011 interviewed 1,004 consumers about:

Employers have the right, with your permission, to check your credit report as part of background screening for employment. A number of lawmakers are interested in banning this practice – do you…

  • Agree with a proposed ban on this practice?
  • Or, are you OK with allowing this practice to continue?

The results of the research on employers using credit report background checks found that most consumers agreed that this practice should be banned:

  • More than half (53.5 percent) of consumers surveyed said they agreed with a proposed ban on employers using credit reports to screen job applicants.
  • 38.3 percent of consumers surveyed said they were OK with allowing the practice of employers using credit reports to screen job applicants.
  • 8.2 percent of consumers surveyed said they didn’t know.
  • In addition, the survey found that more women (55 percent) opposed the use of credit report background checks for employment than men (51.7 percent).

The margin of error for the Credit.com survey is +/- 3 percentage points for the full sample, which included approximately 531 female adults and 473 male adults.

While the use of credit reports by employers is a controversial topic, a 2010 survey by the Society for Human Resource Management (SHRM) found only 13 percent of companies performed credit report checks on all job applicants while 47 percent used credit checks only on selected candidates and mostly for jobs with access to finances or sensitive data.

In addition, four U.S. states – Hawaii, Oregon, Washington, and most recently Illinois – have laws regulating credit report checks for employment screening and other states are considering such legislation. The Illinois Employee Credit Privacy Act, which took effect January 1, bans employers from using credit reports except in specific circumstances.

The topic of credit checks is so controversial that the use of credit reports by employers for employment screening was the #1 Trend in the Fourth Annual Employment Screening Resources (ESR) Top Ten Trends in Background Screening for 2011 at http://www.esrcheck.com/Top-Ten-Trends-In-Background-Screening-2011.php.

Professional and accredited background check providers such as Employment Screening Resources advise employers to not use credit report background checks unless there is a clear business justification so that it is related to the job in question, and to also keep in mind that credit reports may contain errors or not be job related.

“The survey may have been much more useful if the question would have clarified that a person’s credit score is NOT used for employment,” ESR founder and President, Attorney Lester Rosen, commented. “Most consumers do not realize that when used for employment, there is a special version of the credit report that does NOT have information such as the applicant’s age or credit score.”

For more information on how and why employers use credit reports, and how applicants can protect themselves, read a whitepaper on the topic – ‘The Use of Credit Reports in Employment Background Screening: An Overview for Job Applicants’ – on the National Association of Professional Background Screeners (NAPBS) website at:
http://www.napbs.com/files/public/Consumer_Education/Credit_Reports_for_Background_Screening.pdf.

Founded in 1996 in the San Francisco area, Employment Screening Resources (ESR) wrote the book on background checks with ‘The Safe Hiring Manual’ by ESR founder and President Lester Rosen and is accredited by The National Association of Professional Background Screeners (NAPBS®) . To learn more about Employment Screening Resources, visit http://www.ESRcheck.com or contact Jared Callahan, ESR Director of Client Relations, at 415.898.0044 or jcallahan@ESRcheck.com.

Sources:

http://www.credit.com/blog/2011/02/should-credit-checks-by-employers-be-banned-survey-says-yes/

http://www.shrm.org/Research/SurveyFindings/Articles/Pages/BackgroundChecking.aspx

http://www.napbs.com/files/public/Consumer_Education/Credit_Reports_for_Background_Screening.pdf