The HR Technologist

Last week Lance Haun had a really interesting post on his Rehaul blog regarding ways to help stop collection calls.  While the post itself was interesting, it got me thinking about the impact that the current economy is having on people’s job prospects.

I bring this up because Lance’s post last week reminded me of a situation when I was graduating college and looking for my first job.  After much excitement I successfully completed the interview process for my dream job (well, at least for a new graduate) and was provided with the offer letter and the background check form.  Never before had I held a position which required me to undergo a background check, so this was a novelty to me.  Unfortunately the novelty wore off extremely quickly once the results of the check were return and I was informed that I would be unable to start my new position due to a blemish on my credit report.

Here I was ready to graduate college with a massive load of student loan debt piling up and the only thing between me and my dream job was a blemish on my credit report.  In all fairness, I was aware the issue was there, but had long disputed the validity of the obligation (its a long story for a completely different blog).  At the same time I was unaware that would have prevented me from being to accept a position with a very prestigious employer.  Had I known that, the debt would have been paid much earlier, without strongly disputing the obligation.  When it was all said and done, the amount in question was less than $500, but when you’re in college $500 is a fortune.  In the end I finally paid the debt, received a letter demonstrating that the obligation was satisfied and was able to clear that obstacle and start my new position.

Fast forward to the great recession of 2008-2009.  With nearly 12.5% of all US home mortgages at least 30 days delinquent, it’s safe to assume that as a recruiter you either have or will run across a candidate who has a black mark on their credit record. The number is so large due to two primary factors; 1.  Very high levels of unemployment and 2. Declining property values creating situations where people hold mortgages larger than the value of their home (nearly 1/4 of all Americans are currently in this situation).  Substantially underwater mortgages are significantly more likely to default than those who retain some equity in their homes.

Now rethink the situation I described earlier regarding the new job offer.  Imagine you’ve spent a great deal of time being a fully responsible citizen, paying your bills on time , every month.  Now imagine that due to the economy you’ve been unemployed for the past 12 months, have two kids and a spouse, etc.  As a result of liquidating your cash reserves you’ve reached a point where you need to start picking and choosing which bills get paid, and it’s a juggle between paying the electric bill and buying food for your family.  Where you need to pick between making the car payment or paying the electric bill… you get the idea.

Just when things are at their worst, you finally are able to crack through the job market and secure a job offer, for a really good job.  And then all of the sudden your recently blemished credit record prevents you from being able to start that much needed job. Its like a swift kick to the groin, it stings and will probably take you down.  You may not get up again for awhile.  This is the vicious circle that many job seekers find themselves in right now.  You need the job to make the money to pay the bills, yet if you don’t pay the bills you might not be able to get a job.

All of this brings me to the point of this post – in the current economy is a candidate’s credit record truly relevant for most jobs?  HR has a responsibility to the organization to help insure that the best possible talent get in the door and in the current economic climate its time to challenge old thinking, particularly on this subject.