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A friend of mine recently applied for a job in the federal government. He was miffed when he found out that the federal government would run a background check on him that included pulling his credit report.
Related: The History of Credit Scores
He couldn’t understand for the life of him why the federal government would care about his finances when he was applying for an IT job. He assumed that the government would only look at his finances if he was applying for an accounting position to ensure that he knew how handle money. So, he thought it made no difference if he was on top of his payments or not for the job he was applying to.
I tried to explain that everyone hired for a federal government job undergoes the same scrutiny. Everyone receives a basic background check that includes both criminal and credit histories. This is to ensure that all federal employees hired are “reliable, trustworthy, of good conduct and character, and loyal to the United States,” according to the Customs and Border Control website.
My response didn’t make much of a difference to him. He couldn’t understand why anyone would try to cheat the government with how great the government pension is.
Related: What is a Federal Government Pension Worth?
Why Would the Government Want to Look at Your Credit?
If the government notices a lot of missed payments, that could indicate your lack of organization or responsibility. Who wants to hire a flaky individual who can’t hold up their end of the bargain?
Additionally, your credit history can indicate whether you would be a good or bad fit for a job that involves properly handling the government’s money and information.
Finally, if an individual has excessive debt, that may indicate financial distress. And, financial distress may result in theft or even fraud.
Think about all the times that we have read about government or contractor personnel mishandling trusted information for their own financial gain?
Here is a quick list, including a brief bio/background and a recommended book on each of them.
Notable U.S. Spies
Aldrich Ames
Ames was an Operations Officer in the CIA from 1962-1994, who sold classified secrets to the Russians. He received over $2.5 million from the Russians in his lifetime. He battled with serious alcoholism, but he wasn’t really on the government’s radar until he started spending some serious money while receiving a $60,000 salary. This spending included cosmetic dentistry, tailor-made suits, a $540,000 home paid in cash, a $50,000 Jaguar, and extensive home remodeling. If those don’t scream “red flags” given his salary, I don’t know what does. He was convicted in 1994.
Book: Circle of Treason: A CIA Account of Traitor Aldrich Ames and the Men He Betrayed
David Boone
Boone was a US Army signals intelligence analyst from 1970-1991. The Russians paid him $20,000 for intelligence. According to an FBI report, Boone was under “severe financial and personal difficulties” in 1988, when he began spying for the Russians. He was convicted in 1999.
Book: American Spies: Espionage against the United States from the Cold War to the Present
Noshir Gowadia
Gowadia was a contractor for Northrop Grumman from 1968-1986, working on technology relating to the B-2 Spirit Bomber. He travelled to China from 2003-2005 to “provide defense services in the form of design, test support and test data analysis of technologies to assist the PRC with a cruise missile system by developing a stealthy exhaust nozzle,” in exchange for $100,000. He was convicted in 2011.
Book: American Espionage: From Secret Service to CIA
Earl Pitts
Pitts worked for the FBI from 1983-1996. The Russians paid Pitts more than $224,000. When they asked him why he committed espionage, Pitts stated that he had many grievances with the FBI. His desire was to “pay [the FBI] back”. Upon his conviction in 1997, Pitts also warned authorities that he thought Robert Hanssen might be committing espionage. Unfortunately, the FBI did not act on that hunch.
Book: Spying in America: Espionage from the Revolutionary War to the Dawn of the Cold War
Robert Hanssen
Hanssen worked for the FBI in the counterintelligence unit from 1975-2001. The Russians paid Hanssen more than $1.4 million in cash and diamonds over a 22-year period. He was convicted in 2002.
Book: Spy: The Inside Story of How the FBI’s Robert Hanssen Betrayed America
Jonathan Pollard
Pollard worked for the Navy Field Operational Intelligence office from 1979-1985. Prior, the CIA had rejected him prior due to drug use. He received payments of up to $2,500 per month to work for the Israelis. Pollard claimed that the compensation was merely the cherry on top (i.e. he was not doing it for the money). He was convicted in 1986.
The Government’s Response
Most of these men did not seemingly “need” the extra money. However, if someone did need additional funds, that would give further cause for suspicion. With the amount of times that people working within our government have betrayed it, I don’t blame the government for looking into different areas of potential candidates.
I can’t even imagine how many people have committed espionage that we don’t know of over the years. It’s no wonder why the government is willing to spend some additional time and money to ensure that its employees won’t profit from the accessible information. While it may be hard to screen for greediness, a poor financial history can definitely shed some light.
However, once people enter the government, it is possible for their financial situation to go awry. Former congressman Jason Chaffetz published a report disclosing that 100,000 federal civilian employees owed more than $1 billion in unpaid federal income taxes and approximately 63,800 contractors owed more than $7 billion in back taxes in FY 2015. Point being, even if one’s financial situation is good prior to government employment, there is always a chance that things can change for the worse.
While my friend doesn’t appreciate that the government is looking into him, it does make a lot of sense. The government, along with other organizations and companies, wants to prevent employees from potentially profiting from confidential information.
The person you know seems to be lacking in good old common sense. Of course, the Federal Gov’t is going to look into his financial picture. Your friend is in IT. Guess he didn’t make it further in the process of background checking. I was rather surprised at the extent of fingerprinting my first time. Now I have a full background check every two years and I am not even high-level clearance.
Hahaha…I have a feeling that the government is probably not the right fit for him. Especially if he’s worried about what the government might find…
Governments are pretty much the same when it come to hiring talent to fill a need comparing to for profit organizations. All hiring entities want to hire the best candidate with the least potential risk to commit unethical acts. What’s the most common thing that leads people to commit unethical act? Money.
If you hav a history of bad financial management or u organization, the risk of unethical acts in exchange for money increases. This is my thought on why organizations do credit checks on potential employees.
Leo T. Ly @ isaved5k.com recently posted…5 Easy And Simple Money Habits To Adopt To Achieve Financial Success
It makes too much sense not to do a background check on people to verify the things that they say. If there are red flags you can take care of it before it’s a problem in your workplace 🙂
Im going to write something controversial if you’ll allow me too: Personally, I see nothing wrong with a potential employer researching a job candidate’s credit report, same goes for insurance companies when you apply for auto or homeowners insurance. If the applicant doesn’t have their financial affairs in order; if they’re a “roach” and haven’t paid their bills on time they don’t deserve consideration.
If I were an employer I would not hire someone who I deem irresponsible with their budget. I’ll go this far; I worked for a man who once fired one of my male co-managers for being unfaithful to his spouse. Our boss’s philosophy was that “if a man’s spouse & partner can’t trust you, how can I trust you?”
As a Conservative I see absolutely nothing thing wrong with this philosophy.
Thanks for sharing Mr. FIRE by 2023!!! I love hearing your insight so please ALWAYS share. I think companies should be able to do what is best for their company. If they deem it’s good to hire people with impeccable finances great. If they want PR to show they help people that don’t have great finances, that’s great too. Whatever they deem best, should be up to the company…as long as it’s not different sets of rules for different people 🙂
This is part of the loss of privacy in the digital age. I remember reading some employers are asking prospective employees for the username/password of their social media accounts. People will run a credit check on you to rent an apartment, sign up for an insurance policy or sign up for cell phone service. I paid cash for my last car and the dealer ran a credit check on me. They refused to take my personal check even though my FICO was over 800. Something about not have any recurring debt. What the hell does that have to do with a check bouncing? I had to get a cashier’s check.
Out of curiosity, does your friend (the one applying for the Fed IT job) have good or bad credit?
I think my friend has an okay credit report. I think they had some mistakes during the housing crisis but are back on good standing or at least I think they are. I could be wrong, as we don’t normally talk about finances…
Almost any major company checks such things especially if you have access to sensitive info or finances. At some point as an employee there is a level of trust needed. Your credit can show risks to that credibility. It can also show lack of knowledge in certain areas.
FullTimeFinance recently posted…Changes in the Nature of Work
Thanks for sharing Full Time Finance!!! I’m sure their previous employer checked their credit, whether they knew it or not 🙂
In some instances, an employer should be happy with an employee that is bad with their finances. It would probably mean the employee would be more loyal since they desperately need the money and wouldn’t risk losing their job. Someone who is better with money and working towards FI is more of a flight risk.
That’s a great point as well. They’re hopefully motivated to stay employed more than someone close to FIRE 🙂
My hesitancy with this is I was once turned down from getting an online quote from a car insurance company due to lack of credit history. For much of my life I rented apartments (no mortgage), and beforeb that lived with my parents or a significant other, so i didnt pay any specific utility bills and only had 1 credit card which I got when I got my first job.
I would just hope the credit check has a little more leeway than a car insurance company for new college graduates or those who have done the financial ‘right thing’ and don’t yet have much of a history.
Also those spy stories are almost unbelievable.
Thanks for sharing Jacq!!! Like you I hope they look for negative factors instead of a small or lack of history. No point in punishing people that have done well and paid cash for things over time 🙂