A data breach at the credit-reporting firm Equifax disclosed last month—a hack that affected an estimated 145.5 million Americans—cost the company’s CEO, Richard Smith, his job. And, because of many American employers’ hiring practices, the hack could cost many others jobs as well.
The consequences of the hack will probably be felt by its victims for years: With this trove of sensitive personal information, the hackers have an unprecedented opportunity to commit identity theft, signing up for credit cards and loans under other people’s names. Any such fraudulent accounts will appear on victims’ credit reports, and when those accounts fall into delinquency, it will look like victims have failed to pay off their debts.
This will likely make everyday financial activities—say, applying for a new credit card—more time-consuming and difficult for countless millions. It’s also going to affect something perhaps even more consequential: people’s job searches. That’s because, in the estimation of the Society for Human Resource Management, about half of American employers at least sometimes consider credit history when deciding who to hire (though nailing down a precise figure is not possible with the data that are out there). Some companies only run credit checks when an employee would handle money or sensitive information, or serve as a senior manager. But other firms run credit checks for all job positions, and while they do have to ask applicants’ permission before running a credit check, they can also refuse to hire anyone who says no. It’s a practice that had numerous shortcomings before the hack, and now those downsides will likely be exacerbated.