How background checks play a role in hiring decisions

Before hiring a new employee, many companies run various background checks on job applicants, especially for positions that require them to handle financial data and other sensitive information for clients. One of those background screenings is a credit check. Nancy Mann Jackson of Entrepreneur magazine reports that 60 percent of employers are now running credit checks on some of their applicants, which is an 18 percent increase from 2006. Jeff Huckaby, chief executive at IT management firm rackAID, says he runs background checks on applicants because he can't risk hiring a liability. "When you hire someone for sensitive positions, you need to learn as much about them as you can," Huckaby told the publication. The recent recession has caused many unemployed Americans to fall behind on their bills. The Catch-22, writes Liz Pulliam Weston of MSN Money, is that many employers now check credit reports in hiring decisions, so the problem could keep perpetuating itself. For example, applicants for Transportation Security Administration airport screener jobs don't stand a chance if they have more than $5,000 in debt, she writes. Jackson warns employers, however, that making a hiring decision solely on a credit report is against the law according to the Fair Credit Reporting Act.