An Urban Myth can be described this way; “legends are a kind of folklore consisting of stories often thought to be factual by those circulating them. Urban legends are sometimes repeated in news stories.”

On September 13, 2007, VISA USA issued a press release with the headline: “Americans Unaware That Employers Can Legally Refuse to Hire Job Applicants With Low Credit Scores.” The story said that, “the vast majority of Americans do not know that a bad credit score is more than just a barrier to getting a loan — it may also keep you from getting the job you want.”

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/www/story/09-13-2007/0004662292&EDATE

The problem with the story? It is just not factual. The plain fact is that employment credit reports simply do not contain a credit score, since there is no validity in studies that suggest a credit score bears a relationship to employment. It is, of course, fair to say that employers can access an employment credit report which can contain elements of a credit history, so that meeting obligations may be helpful for employment. But to say the credit score is used or provided is factually incorrect.

Unfortunately, the story was then repeated as though accurate in another Bay Area newspaper. The problem with such inaccurate information of course is that it can only cause consumers to suffer unnecessary worry and anxiety. In addition to any other worries, consumers with low credit scores may now think they must worry about employment as well.

Fortunately there was one reporter who saw through the Urban Myth and exposed it for what it was. Columnist Brian O’Connor of the Detroit News set the record straight that employers do not get credit scores and that the credit scores are meant for credit risk and not employment. His advice: “So any job-hunters out there can stop worrying about whether last month’s late utility bill will keep you out of work.”

http://www.detnews.com/apps/pbcs.dll/article?AID=/20070915/OPINION03/709150334/1010/BIZ01

The bottom-line: VISA USA does a commendable job in bringing financial education to consumers, but even they fell for this urban myth. It demonstrates once again that background checks and hiring are complicated subjects that are heavily regulated and present a number of potential traps for the unwary.

We are in the midst of a serious credit crisis in many parts of the US and there are serious concerns about the ability of people to repay their mortgages.

If I was Visa, this is what I would think:

Uh oh, this housing market looks bad. If people begin to default on their mortgages, they could lose their homes. If they lose their home, their credit is destroyed and if their credit is destroyed, they may not feel the need be so punctual with their monthly credit card payment – after your forclosure takes you from a 730 to a 520, whats another 20-40 points from a late or defaulting credit account.

Oh…$%@#!!!!!!!

This could get ugly for us.

Hey – why don’t we let people know that messing up their credit won’t just mean annoying phone calls and excess mail, it could mean something really serious!

Like…?

Hmm – what if you stopped paying your bill and suddenly became totally unemployable?

Sure, you would not be able to pay us, but you stopped doing that anyway – and if you aren’t going to pay us back, we really don’t think you are entitled to participate in the job market.

Get the big three on the line! I got an idea!

Especially in IT and Engineering fields where competition for the scarce talent is intense. Second – many people in various tech fields are only now recovering from serious financial damage that began during the telecom and internet bubbles.

Thirdly, the article represents the mindset of a previous era where the job market was closed and the hiring process was a two way street.

No doubt this goes on, but for the majority of people, I think it is a non story.