I have experienced this first hand. I have applied for a LOT of jobs in the last 2 years and one of two things happens: They don't talk to me, or they do, and I sail past the preliminary interviews only to get rejected after the background check. I am not a felon, a terrorist, or a scourge of society. I have bad credit.(Funny/sad aside, I once went to Best Buy to see if I could get a card to finance something with the idea of improving my credit score. I was rejected summarily. I was trying to buy a toaster. I literally can't finance a toaster.) This scarlet letter had precluded me from any job paying a living wage. And that's why I'm retraining myself. No one cares what the FICO score of a talented software engineer is. At least, that's what I desperately hope the case is. For recruiters out there: Do you care about the credit of a potential coder?
I've always wondered why an employer would demand good credit. Even if the person is a spendthrift, what does it matter so long as they perform their job?
My employee could be living in a shack having had every single item of worth repossessed... but if they can do their job well, why wouldn't I hire them?
In any case, I know what you mean - I'm from Canada, and arrived in the US after the financial meltdown and subsequent tightening of the credit belt. I still don't have a credit rating since I couldn't convince any major bank in the USA to give me a credit card. Yes, this includes secured credit cards (i.e., you leave a month's credit limit with the bank in cash, if you miss your bill at all, they take the entire sum... aka zero risk for the bank) And yes, my credit in Canada is stellar - but that counts for absolutely zip in this country.
It's not until very recently that I was able to flash about an employer's name and convince one of them to cut me some slack. It'll be months still before my credit score populates - this has made renting apartments, and just about everything a nightmare.
The only way I've been able to skate by is by flashing an offer letter and pay stubs showing I make >3x the US median income... imagine if my pay was dead average... I'd be fucked.
At a guess, it probably indicates that the employee is a higher than an average risk of engaging in fraud (to pay off debts), and it probably does, again on average, speak to their discipline, maturity, life skills, etc.
The trouble with that thinking is of course the multitude of reasons that someone can get into debt through no fault of their own - especially in the US with health care - the fact that people often mature faster than their credit score recovers, not to mention situations like your own where there's no credit score to begin with.
I'm glad that in my native Australia, as another poster pointed out, it's illegal to discriminate based on credit score for hiring purposes. It seems that the small amount of good businesses may get from this discrimination is way out balanced by the harm it causes society in general - though obviously I'm preaching to the choir here :)
Agreed. Also the less you're paid, and the less responsibility you have, the more you're scrutinized. Maybe because they can, maybe because at that level there are things you can physically steal, or break. Also maybe (please, I'm speculating) at that level there are likely to be more irresponsible people, and the time and expense of credit, drug and security checks becomes worthwhile.
I'm guessing your in the bay area? Goto the bank of america close to the stanford mall (which is next door to stanford), open an ebanking checking account and credit card. There is a canadian credit program that BoA has that should give you a ~$2000 credit limit card. Most BoA people are fairly clueless (Stanford mall BoA employees are pretty good!), but they do have it. If you can't go there, ask the BoA retail banker to look up the "Diplomat, Large Corporate and Canadian Client Consumer Credit Card Special Handling Form" and the "Bank of America credit card application - BankAmericard Power Rewards Visa Card Diplomat, Large Corporate and Canadian Clients" and they'll have to fill out a W-8BEN since you haven't had a US tax return yet. They'll also need your employment verification letter (your address on the letter will also help), your passport with your visa, your Canadian SIN and your american SSN.
Citibank also has a program where if your a 'newcommer' and can show proof of $1000-$2000 average balance in an american bank account for 3 months or $5000+ in a canadian bank account for 6+ months, they will give you a credit card. They'll need the employment verification letter with your total compensation and address (and passport, and SSN card, and other standard things). If I'm guessing your wage correctly you can get a $9000+ credit limit card from citi. I went to a citibank on El Camino close to Stanford.
Thirdly, Capital One has a newcommer card. I just filled out the application for that online and I got a $500 limit card. I think you just need a new/blank SSN for that one to work. If you can actually talk to an actual person, you might be able to get a better credit limit. They also offered to open a secured card with me when I talked to them on the phone.
Also if you've had an RBC account for 6+ months in Canada, you can get an american credit card from them over the phone. They're a big PITA about it although so I eventually didn't go that route. HSBC premier clients can get sweet credit transfer services worldwide, the US included. I was told in Canada that they do credit transfers after having any sort of account for 3 months with them, but the HSBC banker said they thought only premier clients could get that (that was at the palo alto branch where ~90% of their clients are premier clients, on a barely staffed saturday, so she said she might be wrong). On the east coast TD bank also has a much larger presence, but they will only service you if you live on the east coast. Also American Express canada will also transfer your card over to the US if you've had a card with them in Canada. Also applying for those airline credit cards inside airports and W-8BEN and the employment letter might work too.
If you want to avoid credit checks most of the time, go room mates and explain you just moved from canada. As long as you have a job most roommates don't care about credit histories. People in the bay area are big flakes about roommates, pounce on it and get it setup (deposit and all) right there if you like the place.
Also, best kind of banking there is BoA ebanking for atm cash/check deposits and charles schwab for your paycheck/main account. Schwab refunds all ATM fees worldwide and they don't charge a currency exchange spread, unlike the %2-3 you get everywhere. Great for whenever you fly back to Canada, or travel anywhere in the world. They don't give duplicate cards although, you have to open another free account with them to do that.
Thank you for a very helpful and specific answer here.
For folks who do not have exactly this situation, the easiest way to boostrap up a US credit card history is to go to the bank you have direct deposit with (they have the most reason to like you) and ask to open a secured card. They will open a special savings account and require you to fund it, generally to the tune of $500. That account is then frozen: it continues to accrue (pitiful) interest, but you can't withdraw it. They will simultaneously issue you a credit card with a $500 limit. It is exactly like every other credit card: you pay interest if you revolve balances, it has to be paid on time, and it reports to the credit bureaus.
After 6 to 12 months of "good behavior", they will a) unfreeze your deposit and b) "upgrade" the credit card from a secured card to one of their standard beginning product lines. Expect something like a $2,000 limit at a fairly unfavorable interest rate, much like you'd get if you were a college student.
Continue periodically buying a stick of gum on that card and paying it when it is due, and you'll have 800 FICO within about two years.
Or pay to fuel your vehicle with it and then set aside an equivalent amount of cash and pay the balance off when the bill comes. Of course, if you don't own a car, you can pick some other thing that you'd ordinarily only buy with cash.
Years ago, when I graduated from HS, I had my credit ruined for me by a thief. What I know now that I didn't understand then was that if I had pressed charges, things would have gone differently. But somehow I've managed to slither through life with almost no credit. It's sad to see that times have changed.
I heard this for the first time on HN the other day. I think (and certainly hope) it's illegal for potential employers in Australia to use your credit file as a factor in deciding whether or not to hire you.
Not hiring people with bad credit seems to me to be patently absurd. Talk about kicking someone when they're down - as if non-payment of debt was a crime!
It seems that the likely result of this for most is the development of a disenfranchised underclass of black market employees.
Having healthcare attached to employment makes this all the more despicable.
Why aren't people in the U.S just rioting in the streets?! This is the real outrage.
Not sure about hiring but I just checked my employment agreement (I'm in Oz) and my employer can definitely fire me if I declare bankruptcy:
*the Company may terminate your employment without notice (no payment in lieu of notice will be paid) in any of the following circumstances:
×If you become unable to pay your debts as they become due
×If you are declared bankrupt;
According to the letter of the contract, it sure seems that way.
I went over the contract with the HR team back in the states (I was transferred over to Oz) and they thought these clauses were very strange. Especially considering that Australian workers have much stronger labor rights in practically every other way compared to the US.
I'm Australian but not a lawyer... have heard "unable to pay debts as and when they fall due" as a definition of insolvency, which requires one to declare bankruptcy if directing, say, a limited liability company. The actual act of becoming bankrupt is separate to insolvency, though, so they're probably just trying to cover all bases.
Again, not a lawyer, and only passingly familiar with this stuff, so excuse me if I'm stating the obvious or if it's the same the world over.
I suspect you'll find that clause in your contract is to protect your sponsoring employer from liability in the event that you declare bankruptcy. That is, they cease to be your sponsor and thus absolve themselves of any liability.
Because you'll become poor, and then medicaid and welfare will cover you, somewhat. It's a healthcare system with cracks, but it covers the elderly, college students, most of the employed and the poor, which is the vast majority of the voting populace.
What you're saying is true, but It's difficult to imagine a common scenario where someone with a lot of poor credit decisions has a lot of cash on hand, as those credit decisions usually occur because of limited cash flow.
Also, companies can tell when low scores result from sparse history or poor decisions. They don't just get a 3-digit number. The issue here isn't low scores per se, but low scores resulting from poor history.
Your experience stands in stark contrast to what the general belief of the tech media, including HN, is. Specifically, that the job market for engineers is extremely tight and that even junior developers can name their price, that recruiters are spamming everyone who has ever written a line of ruby, and that even the dumbest ideas are attaining ludicrous levels of funding.
I find it interesting that this 'tale of two cities' situation is becoming more pronounced.
