Borrowing History: How Employers Use Credit Reports in Hiring

• In Event: 237 - Regular Session. Economic Sociology. Debit and Credit

Abstract

U.S. employers increasingly consider credit history when deciding who to hire, tying individuals’ life chances to their past financial behavior and circumstance. About half of employers at least sometimes use credit reports in hiring, even though there is slim evidence that credit history is predictive of behavior at work. In this paper, I use interviews with 57 hiring professionals to understand how employers construct meaning from credit reports, long documents that include detailed financial data as well as other personal information. My findings are two-fold. First, I find that hiring professionals make sense of the context-less information in credit reports by telling themselves moral stories about why people end up in default, and by testing job candidates for their ability to tell morally redeeming accounts of their financial troubles. Second, I find that in many cases hiring professionals rely on credit reports for their traits as records--official, organizationally generated versions of a person’s past--in order to signal having adequately assessed whether a job candidate poses a threat to a company. Taken together, these findings suggest that employers using credit reports undertake a form of morally laden risk management which is as important for its symbolic value as it is for its rational effectiveness, but which nonetheless often means that certain people do not get hired.

Author

• Barbara Kiviat, Harvard University