America is historically known as the land of opportunity; a place where any citizen can pull him or herself up by their bootstraps and attain the American Dream. With the recent recession and continued economic cut backs, a standard credit check holds more weight than ever for both companies and new applicants.
Traditionally, credit checks serve as an important preventative measure for companies. They can avert poor hiring decisions, which have the potential to degrade a company’s budget, standing, and future business. According to research conducted by the Society for Human Resource Managers (SHRM), close to half of the companies surveyed are conducting credit checks versus about 25% a decade ago.
Companies are turning increasingly to credit checks to determine (among other things) whether an individual is responsible or not. The thought is that people with debt/credit problems may be more likely to steal or commit fraud within the company, even if the position doesn’t directly involve money.
Many American’s credit scores have been affected by unforeseen job loss and lay offs through no fault of their own. In addition, the recession caused many Americans to feel financial pressure, including those that had stellar credit reports prior. Beyond employment, numerous prospective employees are under water with their mortgages, behind on car payments, and are maxed out on their credit cards. This does not bode well to their chances of landing a job. We must ask: are the past few years of economic turmoil being considered as companies increase the weight of credit checks?
Today, due to technology, credit checks have never been easier to perform. But just because the checking is easier, does it mean it should be done? We have to wonder, are credit checks ultimately hindering the American Dream?
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