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Risky Business

Should a prospective employee's credit history determine whether he or she gets the job?

This story appears in the September 2003 issue of Entrepreneur. Subscribe »

Screening job applicants used to be about checking resumes and references. Now, nervous employers are going a step further, running credit checks to weed out potential problem employees. Under current law, employers can reject applicants on the basis of their personal credit. But to what extent should an applicant's credit history influence a hiring decision? Obtaining a credit report is one thing; interpreting it is another.

Assessing credit history becomes a judgment call by those doing the hiring, says Frederick Lane, a former attorney and the author of The Naked Employee: How Technology Is Compromising Work-place Privacy (Amacom). Distinguishing danger signs from everyday finances isn't easy.

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