May 29, 2002 Chicago Tribune
By Jean A. Williams. Special to the Tribune

Discredited financial problems can hurt your chances of getting a job - or even keeping one.

You have all the right credentials, had two or three interviews--which you're sure you aced--and have a great work history. In fact, everyone seems to love you. So why haven't you got the call yet? The one that says "we'd like you to come and work for us."

It may be for a reason that has nothing to do with any of the above: Your personal finances. Without a sound credit history, people struggle to land a job, move up in the ranks or just remain employed.

Employers have their reasons to be cautious: Workers stressed by financial woes are likely to be less productive, harassed by creditors on the job and emotionally off center, experts say.

So more employers are peering into the credit histories of potential hires, looking for such telltale signs of financial insecurity as tax liens, garnishments, chronic late payments and poor debt-to-income ratios.
"I think what most organizations are looking for is . . . if this person is working, and outside of any extraordinary events, they're getting judgments, they're getting garnishments, they're getting tax liens or whatever--can I trust them in my position?" said Barry Honig, president and founder of New York-based Riskon, an executive search and consulting firm for financial services and technology sectors.

Some industries, such as banking and finance, are more likely than others to check out a person's credit history before making a job offer. They do so "on the theory that if the employee has personal financial problems, there may be a greater temptation to try to fulfill those obligations by embezzling or stealing," said Teresa Tracy, a lawyer who heads the labor and employment group of the Los Angeles office of Baker and Hostetler.

Even the armed services are wary of the financially unstable. "You'd be surprised, but our armed services take credit and meeting your financial obligations very seriously," said Rudy Cavazos, director of corporate and media relations for Houston-based Money Management International (MMI). "The Coast Guard will make a recommendation to their service person that if they're having financial issues, they need to address that and get it taken care of immediately. If that means being placed in one of our debt management programs, that's what needs to be done."

Other situations where financial issues might turn up as a problem include during overall investigative checks of applicants and candidates for top-level positions in corporations. "When you get into the very senior ranks with sensitive jobs, very frequently firms will call upon private investigator firms," said Honig, citing Pinkerton and Beau Dietl as such firms.

Credit Check

A former principal at Morgan Stanley and former vice president at First National Bank of Chicago (now Bank One) and Banker's Trust, Honig helps find potential executives for corporate clients and determines the financial health of potential hires. For junior to mid-level positions, companies might use a reporting service, such as US Search, to get basic credit reports and criminal history, he said.

Poor finances also can weigh on an applicant during the interview process, Honig said. It can give an interviewee an air of desperation. "That level of fear and angst can come through in an interview and, in fact, give the wrong impression to the interviewer," he said. "Then, of course, you get into the vicious cycle, so to speak, of not getting the job and your problem getting worse."

If you are haunted by the ghosts of your financial past, Honig recommends offering an honest explanation and any plans to clean up your act. "You don't need to go into an interview . . . and say, `Hi, I'm a financial wreck,'" Honig said. "Maintain your composure. Get yourself to the point of an offer and then you have this discussion."

Approval Process

Employers must first get written permission from a potential hire, and in most cases from a current employee, before gaining access to credit history. "The language reads, `[A] person may not procure a consumer report for employment purposes unless a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured, and the consumer has authorized in writing the procurement of the report by that person,'" said Margot Saunders, managing attorney at Boston-based National Consumer Law Center, reading from the federal FCRA as published in the group's 1998 book "Fair Credit Report Act," fourth edition.

Employers also must, by law, state the reason if they turn someone away because of something they saw in a credit report, Tracy said. Mangled credit and other financial red flags also cause problems for the currently employed. Wage garnishments, for example, are becoming more intrusive for employers. From an employer's standpoint, complying with garnishment orders is an administrative burden. "An employee who gets too many garnishments should expect that the employer might take some action," including dismissal, Tracy said.

Financial problems also can jeopardize a promotion. "Again, a common feature of the protective laws is that if such a credit report is going to be done during employment, they have to give notice to the employee," Saunders said. "If they're going to take adverse action . . . because of something that they found in the credit report, they have to let the employee know."

When a criminal act is suspected to have taken place, employers may gain access to a worker's credit report without his permission.
As increasing numbers of Americans grapple with startling debt-to-income ratios, leading to financial chaos, many employers attempt to help their workforce act on the problem.

Cavazos said that more employers are seeking his company's assistance in educating their workers on personal finances. Last year, MMI provided financial self-help seminars on site at 260 companies, he said.

"Employers do recognize this [problem] and do put into effect some options for their employees to consider, to help them resolve their personal financial issues that they might be dealing with," he said.