An interesting conundrum.
In the arms race of hiring, we have always looked for any clue that could reliably predict success. Good scores in an assessment? Do they use their napkin properly at lunch? Do they have executive hair?
Which brings me to credit reports.
I feel guilty. When I speak on the subject of Luck in the Workplace, I have mentioned the rationale of using credit scores to predict behaviors in applicants. I have worked with several organizations that, on my advice, implemented credit report checking along with other screening methodologies. I felt good about it at the time, but that was before the cratering of our economy that began in the early afternoon of October 13, 2009. Our world has changed, and it has changed my outlook on the usefulness of credit report numbers in the hiring process.
Simply put, a huge number of good, productive workers now have poor credit histories, and the usefulness of the report has fallen away. There is an excellent news story on the subject here. Maybe in a few years it will return as a useful predictor, but it is causing more problems that it is worth.
Get back to solid behavioral interviewing, use valid pre-hire assessments, and a good set of application questions. Leave the credit history alone until we all recover…
Karl Ahlrichs' Uncommon Experience 
Amen brother!
I agree with going back to solid behavioral interviewing. I would like to say also, never return to utilizing the credit reporting system for new hires again!
I would never in good economic conditions or bad consider utilizing credit reporting to make hiring decisions for my company without allowing some degree of self defense strategy for the candidates.
The credit reporting agencies policies and procedures are flawed and even further the companies/people that are allowed to submit your information in many cases are incompetent and should be more regulated.
The reporting companies should have an excessive number of obstacles to cross before submitting information so they would check their accuracy multiple times before submitting bogus information instead of placing the burden on the consumer. The various agencies do not even have a uniform process of determining a person’s credit score, what is that?
As far as the number of quality workers with bad credit due to the economic crisis, companies would be foolish not to revise their policy at least temporarily not to lose out on good people as we know many of them are out their in this predicament.
But in retrospect, most of us know the majority of companies using this method will not even know what caused them to lose out on all the talent until it’s too late or by the time they go through the policy change process internally we will already be in the next recession 10 years or so down the road!
A serious background check on the credit agencies themselves is called for before making a decision to put good individual’s employment at the mercy of these incompetent organizations.
WE REALLY NEED A BETTER SYSTEM!