Credit Scores Used by Employers, The Myth of The Decade
Credit scores used for employment screening? I’ve called it the myth of the decade for many years. Why…because it doesn’t happen. Employers don’t use credit scores to screen potential employees. They can use credit REPORTS, in most states, but not SCORES.
You can tell I get a little excitable about this topic. I’ve been arguing with people who “know it happens” since my early days at FICO in the late 1990’s. The minute I ask them to show me an example, any example, of an employer who pulled a credit score for employment screening the conversation ends. Why? Because there has never been a verifiable example of an employer asking for, receiving, and/or using a FICO risk score for the purposes of screening an employee or prospective employee. It’s like the Loch Ness Monster…a lot of people have seen it…but really nobody has ever seen it.
I don’t blame people for thinking it happens. WE can’t even get it right. When I say “we” I mean people who work in the credit and media industries. WE keep telling people, incorrectly, that scores are used for employment screening. WE keep getting it wrong! WE caused the problem and WE cause the myth to persist.
Greg Fisher from CreditScoring.com put together a very entertaining and eye opening collage of clips from websites, television ads, and interviews that show just how wrong so many people get this. Take a look at this collage and you’ll see reputable people, even some who work for key industry players, getting it flat out wrong.
The primary reason why, in my mind, this has become such a prevalent myth is because so many people believe credit reports and credit scores are one in the same. The reality is credit scores are not credit reports and credit reports are not credit scores. Credit scores are a product sold along with credit reports to lenders and insurance companies. The credit bureaus can control the distribution of scores, which means they can prevent them from being sold to employers. Think of it this way…your credit report is the steak and your FICO score is the cheesecake. They’re both part of a great “dinner”, but they certainly aren’t the same thing.
All three of the credit reporting agencies has gone on record, over and over and over, stating that they do not provide credit scores with credit reports to employers. They’ll tell this to anyone who is willing to listen to them. Further, the Consumer Data Industry Association, the trade organization of the credit bureaus, has also stated the same thing over and over. So, the next time you hear, read, watch or listen to someone claiming that scores are used by employers, you’ll know better. And maybe, just maybe, you can help me out by letting them know they’re getting it wrong. Otherwise I’ll be hearing about credit scores and employment for the rest of my career.
John Ulzheimer, who was not hired by SmartCredit because of his credit score, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and the author of the “credit rating” definition on Wikipedia. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. He has served as a credit expert witness in more than 70 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.