Eleven point two percent of you are going to be angry at me for saying this but it has to be said. Eleven point two percent of you will cry foul, unfriend me on Facebook, block me on Twitter [Shameless self-promotion goes here: @SteveOzanCFE], and block me from your feed in LinkedIn. Eleven point two percent of you may even hate me for the rest of my natural life [which if we’re going by statistics should be approximately another 48.7 years].
That’s because according to The Wall Street Journal 11.2 percent of you are not paying your student loans on time (http://goo.gl/26ZL3). Which, is none of my business, I’m not your financial planner or your credit score, I won’t be there to hold your hand when you get a car loan [let’s be honest no one’s getting mortgages right now]. What you decide to do with your money is your own business; except when it’s not.
It’s not just your prerogative when you go out to apply for the first good job that’s in your field to start your career, the one that you’ve been working towards since junior high school [or for you not as driven during the last semester at college]. That’s because when you go to apply for that job, especially in such a difficult market, you need more than a perfect resume’ and cover letter, and a flawless interview where you walk with the interviewer patting your back. You need to also pass the background check and drug test.
If you can’t pass the drug test I don’t really understand what you’re doing reading this blog or what you thought was going to happen when you got a job offer and they asked you to pee into a cup or draw blood for analysis.
The background check, more likely than not for a position worth having, is going to have a credit check section. Goldbeck Recruiting website sites that 91% of companies polled check credit worthiness for a position dealing with financials and 46% check credit worthiness for CFO and CEO positions (http://goo.gl/vEZib). 46% seems low considering you’re handing over the financial information for the entire corporation, a lot more damage can be done at the top than an accountant can do on their own [Enron, WorldCom, and on and on].
The reason given most often for the credit check is simple enough; if the company is going to allow the employee to make financial decisions for them they want to make ensure the person’s own house is in order before they allow the potential employee to make the same type of decisions for a much larger, more complex organization. If you can’t balance your own check book should you be an accountant manager at a major Fortune 500 company? I’d like to think not.
However, my (and plenty of others) reasoning goes far beyond the cursory check to make sure they can do the job. To the fraud investigator it is a matter of will they do their job? If 11.2% of you out there aren’t paying your student loans on time the collectors are going to start calling you. If they can’t work something out with you (and in these cases it doesn’t seem that they have) then they start to call other people you know. This risk of outing your own financial irresponsibility is a huge weight on anyone’s shoulders. It’s also part of the fraud triangle.
Creesey’s Fraud Triangle requires there to be a “need” that cannot be shared by the fraudster. If they’re behind on their student loan payments, creditors are calling them-demanding payment, and they can’t claim bankruptcy to avoid the payments of these loans the fraudster may feel as if there’s no other choice but to take advantage of the position they are given. I said may, it’s not a certainty that the person with a bad credit score and non-payment of student loans is going to for certain steal from their employer but in the job market in it’s current state of bloodletting there are other applicants out there that don’t have that problem [the other 88.8%].
There’s plenty of backlash against this type of screening as Catherine Dunn at Law.com points out here (http://goo.gl/LnJyA) that certain states are placing a ban or at the very least a barrier to the implementing of wide spread credit checks before employment.
This view however is short sighted in the fact it’s not addressing the real problems involved with this issue at all. When you look at the problem, it’s the inability of young professionals to pay off their enormous student loan debt that they took on to get the education they sought out to get these jobs and the ever increasing cost of such an education coupled with the Great Recession to make those positions exceedingly sparse for the new graduates to obtain.
Those are the problems at hand. Not the screening of job applicants for financial responsibility, something that is necessary for their current roles they seek. Law makers would do better addressing the skyrocketing cost of education and the job markets over clamping down on the screening of applicants for the few positions out there as it’s an effective tool to reduce the amount of potential fraudsters within the ranks of potential employees.
For those still seeking employment it’s not a place that is enviable, choosing between cutting back on essentials and paying for student loans. Have your priorities in order however as a quick solution may end up costing you as a job seeker much more in the long run if you miss out on the job opportunity you’ve been seeking for so long.
anti-money laundry 