Myth: Employers use credit scores (video) – National Financial Literacy Month

National Financial Literacy Month – Video illustrates myth that employers use credit scores

creditscoring.com video shows media, experts, central bank and legislators furthering the myth that employers use credit scores in hiring decisions.

Myth: Employers use credit scores

Myth video: Employers use credit scores

ScoreInfo website launched by Fair Isaac

Fair Isaac introduced another website today:  ScoreInfo.  In a press release, Jordan Graham, president of FICO Consumer Services said, “FICO launched ScoreInfo.org to help consumers better understand their disclosure notices and how to use that new knowledge to their benefit.”

On January 1, 2011, federal Fair Credit Reporting Act risk-based pricing notice rules went into effect.  The Federal Trade Commission and the Federal Reserve Board issued joint press releases, but there is no link to the Fed’s version here because its chairman, Ben Bernanke, has still not responded to the question about its statement about employers using credit scores.

The website joins Fair Isaac’s other websites FICO.com and myFICO.

Zillow and SF Chronicle believe Fed credit score info

Consumer reporting agencies TransUnion, Equifax and Experian all emphatically state that they do not provide credit scores for employment purposes.

Despite that, again, the Federal Reserve claims that credit scores are, indeed, used in employment.  Zillow and the San Francisco Chronicle believe it.

The first sentence of a Federal Reserve Bank of Cleveland commentary states, “Credit scores are used in nearly every part of our lives, from applications for car loans, mortgages, credit cards, and car insurance to even some hiring decisions.”


Federal Reserve and Credit Karma statistics

On August 6, the Federal Reserve said, “Revolving credit decreased at an annual rate of 9-1/2 percent, and nonrevolving credit was about unchanged.”

On August 11, Credit Karma reported, “Nationally, credit card debt amongst consumers with a credit card decreased by one percent since June 2010. However, credit card debt is up nearly 14 percent since July 2009.”

“Consumers have charged more on their credit cards and as a result, credit scores are lower,” [Credit Karma CEO Ken] Lin said. – San Francisco Business Times

AJC blogger counters her U.S. Senator

Speech-making, writing, blogging, stating and yakking adds up to much mush

Last week, the U.S. Senate passed its financial reform bill with an amendment regarding credit score use in employment.  Senator Udall from Colorado sold the idea by saying that employers use credit scores.  The problem with that is that the consumer reporting agencies say that they don’t even provide credit scores for employment purposes.

Udall has not replied to a request asking for substantiation.

Two weeks ago, as an Atlanta Journal-Constitution blogger profiled the Equifax consumer reporting agency CEO, the writer dropped the E-Bomb, referring to a “paranoia.”  Sh’yeah!  A self-fulfilling prophecy in the making.

The blogger has not replied to a request for substantiation.

But, redemption for ATL came in the personage of another AJC blogger.  She quotes her senator, then contradicts his statement.  Rana Cash writes:

“I believe it’s only fair to allow consumers access to their credit score when it is used against them to deny credit, require a higher interest rate on a loan or prevent an applicant from being hired for a job,” said Sen. Johnny Isakson (R-Ga) in a statement. Employers often use credit reports, but do not have access to credit scores.

Ouch.  Ouch-O-Mondo-Matic!

The senator was asked by creditscoring.com to reply with substantiation.

Rag-tag army of dissenters

Cash is not alone.  John Ulzheimer, a New York Times blogger and no slouch in credit reporting and scoring said that there is “mountain of evidence that scores are generally not used by employers.”  He talks about the phenomenon on televison.  He had the last word on it– then had the last word on it.

Highly-intelligent and incisive Bankrate writer with exquisite taste in multimedia Leslie McFadden discovered the creditscoring.com video and wrote about the issue in “Credit score myth persists.”

In the Columbia Journalism Review, a reporter had an epiphany and, in a rare moment of leadership in the media, felt a sense of responsibility to his readers that caused him to– gasp– actually make a correction.

They are joined by ChoicePoint, the Privacy Rights ClearingHouse and CNN.

And finally, Lester Rosen, lawyer, author, speaker, expert witness and background screening company president– who knows a little about employment credit reports– keeps hammering away at the “urban myth.”

But, when you’re up against the Federal Reserve, with its access to congressional hearing rooms, it ain’t easy.

The Fed has not replied to a request for substantiation.

Request for Federal Reserve’s evidence regarding employers using credit scores

From:  Greg Fisher
To:  Sandra F. Braunstein, Federal Reserve
Subject:  credit score, employers, Federal Reserve, 2010-03-24
cc:  Michelle A. Smith, Federal Reserve; ConsumerHelp@FederalReserve.gov; Pierce Nelson, Sibyl Slade, Jean Tate, Federal Reserve, Atlanta; Federal Trade Commission Office of Public Affairs; Gerri Willis, CNN; realstories@cnnmoney.com; letters@smartmoney.com; Aleksandra Todorova, Stephanie Auwerter, SmartMoney; Elizabeth Warren; freshair@whyy.org; talkback@whyy.org; frontline@pbs.org; Gosia Wozniacka, The Oregonian; Jennifer Openshaw; PublicAffairs@dobi.state.nj.us; consumerfinance@dobi.state.nj.us; John Peace, Don Robert, Susan Henson, Susan Thomas, Media Relations, Corporate Responsibility, Experian; press.office@uk.experian.com; worldservice@bbc.co.uk; editor@mediaguardian.co.uk; haveyoursay@bbc.co.uk; gazette@independent.co.uk; online.editor@timesonline.co.uk; news@timesonline.co.uk; business@timesonline.co.uk; Barry Paperno, Craig Watts, FICO
Sent:  4/19/2010

See http://www.creditscoring.com/influence/government/federalreserve/employers2009atlanta.html and http://blog.creditscoring.com/?p=1154.

Last month, you stated to congress:  “Credit scoring is widely used to evaluate applications for credit, identify prospective borrowers, and manage and price new and existing credit accounts. It is also used to facilitate decisionmaking in other areas including insurance, housing, and employment.”

However, consumer reporting agencies who compile and maintain files on consumers on a nationwide basis state that they do not use credit scores for employment purposes.

What evidence suggests that employers use credit scores? 

How many employers use credit scores? 

Do you have the identity of one employer who uses credit scores?

Greg Fisher
The Credit Scoring Site
greg@creditscoring.com
creditscoring.com
PO Box 342
Dayton, Ohio   45409-0342
937-681-3224

employers and credit scores, Kirwan Institute

From: Greg Fisher
Sent: Monday, March 29, 2010 1:41 PM
To: Jessica Leveen Farr
Subject: credit score, employers, Kirwan Institute

Recently, you wrote, “Landlords may evaluate an individual’s credit prior to renting a home and some employers access credit scores for all new hires.” 

Your footnote cites the document, “The Impacts of Foreclosures on Families and Communities: A Primer,” by G. Thomas Kingsley, Robin E. Smith, and David Price. 

The only mention of credit scores in that document is in an endnote, referring to the document, “Credit Scores, Reports, and Getting Ahead in America,” by Matt Fellowes.

That document refers to a survey:  “A 2004 survey of companies by the Society for Human Resource Management, for instance, found that 35 percent of companies used credit reports for this purpose, up from 19 percent in 1996.”

In April, regarding its 2004 “Reference and Background Checking Survey,” the SHRM replied, “Neither survey discusses credit scores, only credit checks.”

What indicates that employers use credit scores?

What is the name of an employer who uses credit scores?


From: Hughes, Jennifer [SHRM]
Sent: Thursday, April 09, 2009 5:04 PM
To: creditscoring.com
Subject: RE: credit score, employers III

Hi Greg,

Neither survey discusses credit scores, only credit checks.

[full correspondence with SHRM]

Employer hiring decisions, credit scores, and the Federal Reserve III

See the previous email to the Federal Reserve.

To: Partners in Economic and Community Dvelopment, Federal Reserve Bank of Atlanta; Sibyl Slade, regional community development manager, Federal Reserve Bank of Atlanta
From: “creditscoring.com” <greg@creditscoring.com>
Subject: Re: credit score, employers III
Cc:
D. Pierce Nelson, public information officer, Public Affairs Department, Federal Reserve Bank of Atlanta;
Webmaster, Federal Reserve Bank of Atlanta;
Jean Tate, media relations liason, Federal Reserve Bank of Atlanta;
Federal Reserve Consumer Help; 
Dennis P. Lockhart, president and chief executive officer, Federal Reserve Bank of Atlanta;
D. Scott Davis, chairman, Federal Reserve Bank of Atlanta (via email address of Debbie Curtis-Magley, UPS;
Patrick K. Barron, first vice president and chief operating officer, Federal Reserve Bank of Atlanta;
Carol B. Tomé, deputy chairman, Federal Reserve Bank of Atlanta;
Date:  2/26/09

Please reply.

At 12:22 PM 2/17/2009, creditscoring.com wrote:

Please reply.

At 12:34 PM 2/12/2009, creditscoring.com wrote:

You wrote, “The lack of a solid credit score typically influences the cost of credit, vehicle insurance rates, utility deposits and employer hiring decisions.”

See http://creditscoring.com/influence/government/employercreditscorebelievers.html .

Who is your source regarding credit score use by employers?

What is the name of an employer who uses credit scores?

 [Update, 4/18/10:  http://creditscoring.com/influence/... atlanta.html]

Employer hiring decisions, credit scores, and the Federal Reserve

The Federal Reserve Bank of Atlanta periodical publication “Partners in Community and Economic Development” (Vol. 18, No. 2, 2008) contains an article titled “New FICO Model Changes Approaches to Consumer Credit.”

Here is the initial email to the U.S. central bank:

 

To: Partners in Economic and Community Dvelopment, Federal Reserve Bank of Atlanta; Sibyl Slade, regional community development manager, Federal Reserve Bank of Atlanta
Subject: credit score, employers
Date:  2/12/09

You wrote, “The lack of a solid credit score typically influences the cost of credit, vehicle insurance rates, utility deposits and employer hiring decisions.”

See http://creditscoring.com/influence/government/employercreditscorebelievers.html .

Who is your source regarding credit score use by employers?

What is the name of an employer who uses credit scores?

 See the next email to the Federal Reserve.