Will a bad credit report cost you a job?

On November 25, 2019
Will a bad credit report cost you a job?

In the November 26, 2019 Ask The Headhunter Newsletter a reader questions the value of a credit report when judging a job applicant.

Question

credit reportIs a credit report from the big three credit reporting agencies (e.g., Experian) a good proxy for determining if a job candidate would be a security risk? Should a candidate be given the opportunity to explain and provide background about any items on a credit report that may appear as a negative to a potential employer? Or, should the credit check stand as a pass/fail test that a potential employer uses to determine if a candidate might be a security risk?

Nick’s Reply

You’re not asking how to avoid getting rejected for a job because of your credit report, but whether I think this would be justified or wise on the part of employers. We’ll stick to the topic here. If there’s enough interest, we can tackle the “how to” another time.

While we might make a case for employers doing credit checks on job applicants, it makes no sense to me why employers rely on such information to judge whether an applicant might be a security risk — especially not on a pass/fail basis. I haven’t seen any statistics on the actual correlation, much less any suggestion that credit records predict security worthiness. (If someone’s got statistics, please share in the comments section below.) The real risk to the employer is that it loses an otherwise excellent candidate to an assumption that credit behavior correlates with job performance and security worthiness.

Does a bad credit report make you a bad hire?

It might seem silly to make the comparison, but do we reject applicants who’ve been divorced because they are more likely to be bad business partners? Do we reject software developers because they don’t do proper maintenance on their cars? What about people with disabilities? Are they risky hires? Oops. The law protects them. Do you see where I’m going? I think employers should stick first to judgments about whether a candidate can do the job effectively, and second whether they fit the social norms of the organization.

In the U.S. there are laws that govern the use of credit checks on job applicants. Of course, these vary by state. I like Alison Doyle’s rundown on job applicant credit checks.
The challenge is how to assess those characteristics. While I’m not opposed to psychological testing and correlational evidence to make judgments like these, I think HR departments screwed the pooch long ago when they deftly transferred liability for hiring judgments to tests and indirect metrics of character. I believe this is a huge cause of HR’s “talent shortage” problem. These indirect assessment methods cost employers good hires. (See Big Data, Big Problems for Job Seekers?)

Employers need to teach hiring managers how to make better assessments and judgments of candidates directly and personally. It’s an interview skill. But how many companies teach interview skills?

Is your credit report a valid and reliable metric?

I agree that, if a credit check is to be done, the applicant should be allowed to explain the report – but that opens another legal can of worms. The applicant could potentially sue the employer for rejection based on misinterpreting the information. This, of course, is why the employer might use a credit report as a pass/fail metric without disclosing it to you. (For more about this, read my good buddy Suzanne Lucas’s warning to employers, If You Run Credit Checks on Your Job Candidates, Now Would Be A Good Time To Panic.)

Is there any defensible reason for basing a hiring decision on such a data point? It’s hard to make the case that it’s valid except as an indication of credit worthiness (and even that can be questionable). It’s worth looking up “validity” and “reliability” in the context of making assessments. Does a credit check really measure what you need to measure?

Employers have explaining to do

Here’s how I think I prove my point. I’ve never heard of an employee being terminated because the employer checked their credit report. If credit checks are such valid and reliable indicators of security worthiness (or any other job-related requirement), why don’t employers run reports on all employees annually to decide whom to terminate? I think HR has a lot of explaining to do.

Employers try too hard to offload candidate assessment to indirect metrics, and they do a lousy job of justifying themselves. In most companies, it seems HR’s first objective is to offload liability. I think the better practice is for employers to make their interviewing and reference checking more rigorous. To avoid unreasonable risk, make managers very good at interviewing and judging job applicants.

My snarky suggestion to job seekers is to ask a snarky but justified question if an employer brings up a credit check. “Can you show me empirical evidence that my credit report is a valid and reliable metric for judging me as a worthy hire?”

You’d be surprised how many successful people I’ve placed who had questionable “background checks.” It takes a lot more to really judge someone – or you miss some great candidates!

Have you missed out on a good job (or a good job applicant) over a credit check? Have you outwitted a negative credit report when applying for a job? Do you believe credit checks tell employers anything useful about a person? Is someone’s credit report a worthy pass/fail test for hiring?

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Want the job? Go around HR

On March 5, 2019

In the March 5, 2019 Ask The Headhunter Newsletter a reader wastes time begging HR.

Question

Can I re-apply for a job if there are vacancies still open after my application has been turned down?

HRNick’s Reply

Of course you can. But why would you want to? Fool me once, fool me twice — you’ve already learned this company chews up applications and spits them out without even talking to the applicant.

Think about this: The hiring manager probably doesn’t even know you applied! The manager probably has never seen your resume! A personnel clerk with no expertise in the work you do (or in the open job) put a big X on your application.

But there’s a smart alternative: Go around Human Resources (HR). Go around the job application form.

Go around the system

The conventional advice on this problem is that if HR has already rejected you, you shouldn’t waste your time. But that’s like the boy who shows up to a girl’s house to ask her on a date — and the gardener shoos him away, so he gives up.

Personnel jockeys don’t control the jobs, so don’t let their officious posturing convince you that they do. They control the applications — but don’t go that route! Don’t take no for an answer until you hear it straight from the hiring manager.

Go around HR

Get in the door without an application, and without facing the “job application meat grinder software.” Here are the basic steps for going around the system — though they are not for the meek.

1. Throw out your resume.

The average time a manager spends reading a resume is six seconds. It’s not a good way to get in the door. (See Tear your resume in half.) Don’t use a resume.

2. Don’t apply for jobs. Find problems to solve.

You have millions of competitors applying for millions of jobs, so stop competing with them. Don’t submit job applications. Instead, read the business and industry press. Find a handful of companies that have specific, well-publicized problems. Decide how you can help solve those problems. (If you can’t figure that out, then that company or job is not for you.)

3. Find the managers.

HR will tell you you’re not allowed to contact hiring managers directly. That’s the best reason to contact the managers directly! But don’t ask the managers for a job. Talk shop. Explain that you’ve learned about their problem. (See How to get to the hiring manager.)

4. Offer a solution.

Whether in person, by phone or e-mail (in that order of preference) briefly explain to the manager how you can help solve the problem. Outline your solution in 3-5 steps. Don’t give all the details — but your summary had better be good.

5. Ask for a 20-minute meeting, not a job interview.

“If you’ll spend 20 minutes with me, I’ll show you why I’d be a profitable hire. If I can’t prove it to you in those 20 minutes, I will leave.”

That’s no easy task. But if you can’t show in 20 minutes why you’re worth hiring, then you have no business in that meeting. Of course, you will have to present a more detailed “proof” if the manager is impressed.

Everything else is a waste of time, designed to make busy work for HR that looks like productivity. You can and should apply for a job you believe — and can prove — you can do. But don’t waste your time applying on a form to the HR department.

For more about this approach to landing the job you want, please see Skip The Resume: Triangulate to get in the door.

If you want another shot at another job at this company, of course you can try again! But don’t waste your time with the gate keeper. Go talk to the real decision maker!

Now get to work, because doing what I suggest is hard work — as hard as that great job you want. So do the work to prove you can do the job.

I’d like to hear from those who are willing to invest the time and effort to try what I’ve suggested. Any takers? How do you go around HR?

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Are you over-qualified for a grunt job?

On August 8, 2011

In the August 9, 2011 Ask The Headhunter Newsletter, a job hunter gets rejected for demonstrating initiative, and asks for a work-around:

You have urged us to convince the hiring manager we can bring value to a job. Believe it or not, this doesn’t seem to be appropriate in some circumstances, unfortunately.

I have had experiences with accounting and IT (information technology) hiring managers. Each had a detailed requirement of the role to be filled. When I focused on what I could bring to the table, the post-mortem in each case was, “She is overqualified.” They just wanted someone to tick off the boxes on the requirement and show proof of competence in those areas. Going beyond was automatic rejection.

Maybe certain roles demand a pedantic mind to succeed, and it’s not possible to present a good business case to such people when they are the hiring managers. What do you think?

Nick, do you have a work-around for this circumstance?

Here’s the short version of my advice: (For the entire column, you need to subscribe to the free newsletter. Don’t miss another edition!)

This is an excellent question. But I don’t think this is really about the job. I think it’s about the employer. I’ll take the liberty of re-phrasing it:

Do I want to work for someone who wants me to be a grunt, and not add anything to the job?

If you do, then don’t offer anything more in the interview than the interviewer asks for. That is, check off the boxes and go along for the ride. The trick, of course, is figuring out whether the employer wants more or not. I’m not sure that’s possible without betraying higher intelligence and motivation.

But if you want a job where you’re contributing to the business, and if you want an employer that cares, then keep doing what you’ve been doing. Show what you can bring to the table. Employers that want to hire robots will fail the interview, just as this one did.

No offense intended — honest — but I think what you’re getting at is, How do we dumb ourselves down so we can get a job that doesn’t require our full participation?

Maybe you just answer the questions you’re asked, and say little more than that… (This is where some of my advice is omitted. To get the whole story next week,  subscribe to the newsletter. It’s free! Don’t miss another edition!)…

Note to human resources managers: If your company wants grunts, please stop talking about “hiring talent.” You know who you are.

I know there are managers who don’t give a rat’s batootie how capable a job candidate is, beyond meeting the minimum requirements. There are also people who close their eyes and gobble down anything in the fridge, because they consider cooking a waste of time. Anything they can stuff in their face will do.

I don’t disparage anyone who just needs a job to pay the bills, and who will take anything they can get. But that’s not the audience I write for. I write for people who love to cook tasty meals and enjoy seeing big, gratified smiles on the people sitting around their table — like their boss and their co-workers. Because life’s too short for just plain “competent.”

Managers who reject job candidates capable of doing more than the job description aren’t managers. They’re grunts, too. When grunts run a business, talented workers eventually all leave. The customers and investors usually depart after that. I think getting rejected by grunt managers is a good thing. But if you want to work around such rejection, just sit quietly and chow down on the mush grunts serve you.

I’m sure people have strong opinions about this. I’d love to hear them! Even routine jobs benefit from smart, motivated workers who want to help a business be more successful. But I could be wrong. Are employers smart to hire grunts?

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