Pastoral Candidates and Credit Checks

Discussion in 'Pastoral Ministries' started by Pastor Larry, Jul 24, 2007.

  1. Pastor Larry

    Pastor Larry
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    The NBA officiating problems shed new light on churches and pastoral candidates. In a recent discussion, some objected to a church running a credit check on a pastoral candidate. My advice: Don't try to become an NBA official.

    Word has it that the NBA expects more from their officials than some churches do for their pastors. The NBA runs credit checks and background checks on officials. Many companies do as well.

    I think it says a lot about us when the world expects more from their workers and employees than the church does from their pastor.
     
  2. tinytim

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    Ok, let's say a church runs a credit check...

    What criteria will it use to decide to pass on the candidate?...
    What would be a low enough score to exclude the candidate?...

    Would the candidate be given the results and allowed to a rebuttal?

    Maybe these answers can be answered from someone that has been through this...
     
  3. Pastor Larry

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    It could be any number of things, and should be left to the individual church. In normal cases, we should expect a high credit score, with very little in terms of revolving debt, or debt on non-appreciating items (e.g., cars).

    I think candidates should be given the information and if there are discrepancies or explanations, to explain them.
     
  4. Jkdbuck76

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    Yes. Credit checks are fine for the Pastor.

    But also a church needs to scan their credit score about twice per year.
    A pastor is considered a CEO and he can get a credit card in the name
    of YOUR church, rack up a huge bill on it and disappear.

    So don't just watch the pastor, make sure the church has a credit
    report done about twice per year.
     
  5. TomVols

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    Guys, we've already been down this road just a few days ago, and this discussion has crept into other threads, too. Let's spade some new ground and keep it in appropriate threads, please.
     
    #5 TomVols, Jul 24, 2007
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  6. TomVols

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    As I stated in the other thread, my main problem with this is finding qualified people in the church who had fit knowledge to evaluate this and who could be trusted not to violate the sundry federal laws governing privacy. Most pastor search committees can't even read a church's financial budget or balance their own checkbook; now you're going to throw a credit report in front of them? And like most churches, this will become public spectacle. So the casual attender is going to be eyeing your credit report, containing your credit card number, your phone account number, and your social. ID theft, anyone? And churches are flopping when evaluating educational credentials, but they're able to evaluate credit reports?

    And just for kicks, what if a pastor does have moderate revolving debt, but it's paid up, not a late pmt to be found? Which credit bureau are you going to use? Which scoring model (FICO, TRI-MERGE)? (what is high to one bureau is not as high to another, and the new model skews it even further). What about the guys who might have a 780 tri-merge, but who get churches in debt and walk away? What about new men right out of seminary/Bible college with little to no established credit, thus little to no score on most models? What do you do about the fact that credit bureaus are notoriously unreliable in compliance with the FDCPA, FCRA, and others? How do you evaluate the liquidity of a pastoral candidate, which will not appear on any credit report? You can have a great tri-merge but live on payday advances, barely liquid at all with no savings and no retirement. Isn't this worthy of evaluation?

    And just FWIW, I've never yet seen a church ask for a credit report that didn't have financial problems of its own. NEVER. And no one I know has had a dissimilar experience. Simply put, most churches who ask for this are doing so because there's a problem or has been a problem.

    While I get and agree (to an extent) with the point of the OP, remember, that our standards and the world's standards are different. We shouldn't copy things from the world just because they make "sense." Too many churches copy best business practices and compromise the Word of God, but care not, because some business expert diguises his "wisdom" and it appeals to the fleshly, world-driven business model of the church rather than a Gospel, Word-driven model.

    Pastors need to be better stewards and in so doing will be fulfilling the requirement of ruling their own household well. However, there may be better ways of examining this than the landmine of churches running credit checks.

    On a personal note, let me encourage EACH OF YOU to examine your credit report. The overwhelming majority of credit reports have errors. You, or someone you know, has probably already had their identity stolen at least once. This crime is jumping exponentially. Please ensure your financial safety. Check your credit report at least yearly, and be on the lookout for suspicious activity. www.annualcreditreport.com can guide you to getting a free credit report once a year. Do not use the other sites as they can lead to scamming and end you up signing up for bogus credit monitoring systems that do nothing but take your money.
     
    #6 TomVols, Jul 24, 2007
    Last edited by a moderator: Jul 24, 2007
  7. Hardsheller

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    I still think a certified financial report by a CPA which includes a summary of the credit report is the best way to go.
     
  8. TomVols

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    Describe what this entails. This would seem to me to be very expensive and cost prohibitive for most churches, and way too much effort required of search committees. As I said earlier, most will not bother to check references or educational credentials.

    What does this entail?
     
  9. rlvaughn

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    While this sounds like a good idea, I think Tom raises plenty of things to call in question the advisability of the practice. It might be interesting, while a church is airing out the potential pastor's dirty laundry, to call for a credit report of the search committee and deacons!

    On another note, I would like to second Tom's exhortation to take advantage of the new law allowing one free credit report per year (that's one from each agency). I was interested to find that I had a former address in Rockwall, Texas, even though I've never been to Rockwall, much less lived there!
     
  10. TomVols

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    You may need to really check your report and maybe even flag it. This is common to ID theft reports, not just erroneous information.
     
  11. Hardsheller

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    It would include a Balance Sheet - Assets versus Liabilities
    It would show an asset to debt ratio.
    It would include the candidate's credit score and an analysis by the CPA of his or her opinion of the candidate's financial position.
    It would answer the question - Is the candidate financially solvent?

    A credit report by itself can only show outstanding debts and payment history.

    A candidate with a large debt load and a good payment history might be overlooked simply because the committee never knows what his total financial picture is.

    As I stated before - if a search committee were to look at my credit report alone right now - they would think - Man, he's got too much debt. And even though I have an excellent credit score and a great payment history they might still not give my resume a second look. All because they have only one side of my financial picture. They really don't know if I'm financially solvent or not.

    I'm all for credit checks on pastors, but there is a real danger that a church could overlook a good candidate simply because they don't possess enough information.
     
  12. Pastor Larry

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    I think Tom's questions are pretty easily answered.

    First, to blame the incompetence of a search committee or deacons is really irrelevant. The fact that they may not be able to read it, or may not be perfect themselves, is dodging the issue, not addressing it. It would not be difficult to do as Hardsheller suggested. Compared to the money you would pay a pastor, paying a CPA or some such is a drop in the bucket. However, I don't think comparing assets and liabilities is the way to go. I don't think assets are that big of a deal. The question is liabilities. The church doesn't need to know the total financial picture. They need to know if a man is a lover of money and a good manager of money, and if he has a good reputation with those outside. A CPA or qualified person can look at a credit report. An unqualified person can look at a credit report and see what credit card balances are, what payment history is, if there are collections, etc.

    As for moderate revolving debt and credit scores, if you see a guy with 20K in revolving debt with no late payments, and you know what your salary package is, you can tell very quickly whether or not he can manage it. Furthermore, when you see a guy in unpaid revolving debt, you want to know what it is for. In many (if not most) cases, revolving debt is incurred by people living beyond their means. You don't want a pastor who does that. The general rule is If you can't pay for it, then don't buy it.

    You can't evaluate everything. With due respect to my friend Tom, to suggest that credit scores may be inaccurate, that you can't evaluate liquidity, that deacons might have problems, that churches may have financial problems, etc. is simply missing the issue.

    A credit score is a good way to tell if a man is a lover of money and one way to tell if he has a good report with those outside. (If a man has bills in collection, it may mean that he does not have a good report withoutsiders.) These are qualification issues and asking a man, "Do you handle money well" won't get at the answer.
     
    #12 Pastor Larry, Jul 26, 2007
    Last edited by a moderator: Jul 26, 2007
  13. TomVols

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    Larry, I appreciate you taking the time to respond, friend. However, many of my questions went unanswered. I will respond to your general observations, however:

    I wholly disagree. If the search committee is not competent enough to read the information found in the report, what makes anyone think they'll be competent enough to do anything with it?
    I don't disagree in theory. I do disagree that churches would be willing to pay a CPA the $200-$400 necessary to do what is being asked. Even if it's half that amount, churches I have consulted with on pastoral searches (Not churches I've candidated with, though I'd include them, too) are just hesitant to spend money like this.
    I wholly disagree. If a man has no debt, for instance, but his bank statement shows an ADB of $50, then that man is living on the brink of financial disaster and no credit report would show this. Also, why just look at a credit report? What about a CheckScan, which shows bounced checks? Someone can have a trimerge of 800 but not be able to open a bank account anywhere because they are -$250 in the hole at a community bank/credit union.
    I wholly disagree. Your credit score is one piece of the puzzle. I personally believe a man is not "managing his household well" if he's not saving for retirement, have adequate emergency savings or does not have adequate term life insurance coverage for his family should God take Him early. These are sins equal to being in too much debt, IMHO.
    I disagree. With my background, I can. When I sit down with clients and go over their credit reports, most often, I get puzzled looks as if I've just handed them a jigsaw puzzle. I am not saying it should be this way. I'm just saying it is what it is.
    and what would "moderate" be? Again, we're not quantifying what we're looking for here.
    A somewhat fair point. However, maybe the wife will work, too. I can't see a church using this as a total disqualifier. (Interestingly, if a man has 20K in revolving debt with no lates, based on scoring models, he could have a higher FICO than a man who has 5k in debt with no lates. Pct of debt to limit plays in as well. I've seen people pay off and close credit cards and see their scores drop.)
    Fair point.
    I disagree mildly. Some people are able to use cc debt well. For instance, we use one for emergencies and occasional purchases that are not (just to keep our credit scores up). We rarely carry a balance. However, there are days that our tri-merge would show more debt than is really there. However, we never use cc's for meals, entertainment, gas, groceries, etc. Financing a tie or a pizza or a tank of gas? Please.....We wear out our debit cards for things like this, though.
    I won't suggest it. I'll say it. Studies have shown that as high as 80% of credit reports have errors http://www.cbsnews.com/stories/2004/10/12/earlyshow/contributors/raymartin/main648887.shtml
    I'm in the middle of a fight right now because I have two medical bills on my credit report than have been paid for years. However, the hospital was in the middle of an acquisition and outsourcing of its billing dept, and they did not report that the bill was paid, so the matter went to a collector. (save your receipts or print your checkscans if you don't get cancelled checks anymore, people). I also just finished a protracted fight to get a bill taken off that wasn't mine. And it's commong knowledge in the financial services industry that credit bureaus are just notoriously lax in compliance with FDCPA and FCRA. Once again, I urge everyone to check their credit reports....
    I believe it can be done by the right people...
    I don't recall bringing this up. Someone else may have.
    Again, I don't recall bringing that up. Some churches are indeed poorly financially managed, but that's another issue. (Always ask for financials when you candidate at a church. I know a man who walked into a church that was head-over-heels in debt and behind on its bills, but didn't know, until months later when his health insurance was cancelled because the treasurer didn't pay the bill....
    What about a man who has four flat screen tvs, all the latest gizmos, but a high tri-merge? Isn't he a lover of money?

    I don't think it's the best way. I don't even think it's a really good way. But I am not opposed to churches examining the financial fitness of a man, so long as this is not exalted above the other qualifications of 1 Tim 3 or Titus 1.
    I agree completely. I just think a credit report isn't the bene esse of answering the question, either. It's a piece of the puzzle that could be used by properly trained folks. I think this is our biggest area of disagreement, friend. You seem to be arguing that a credit score is the be all, end all. I just disagree with this.

    All pastor search committees need to do a better job at screening candidates, and churches should do a better job at screening their pastor search committees :thumbs: All pastors and all Christians should do a better job at being good stewards.
     
    #13 TomVols, Jul 26, 2007
    Last edited by a moderator: Jul 26, 2007
  14. TomVols

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    Well said and worth saying.
     
  15. Pastor Larry

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    But my point is that incompetency on the part of the evaluators does not make evaluation unimportant. In other words, we shouldn’t lower the standards because the “judges” are incompetent. Let’s get better judges.

    But should they be? No. If you are going to pay a pastor $50,000 in the first year, why not spend less than 1% of that to do some background checks? Hesitancy to do the work may be why many churches end up in trouble.

    Perhaps, but if the church is willing to pay him properly, he will not be on the brink of disaster unless he is bad with money. A credit report will usually show that.

    I think that should be checked as well. Do you want a guy with a history of bouncing checks?

    Yes and no. I know what you are meaning, but retirement, emergency saving, life insurance are all modern things that are not biblical issues. Debt is. Having none of those other things will not disqualify a man; being in debt can.

    I looked at mine and my wife’s two nights ago. I was not confused in the least. And I know very little about accounting.

    To me, if a person is carrying credit balances on voluntary purchases, that is questionable. I am not talking about cars and houses (though that may factor in). I am talking about people with thousands of dollars because they went out and bought furniture and TVs and toys, and they go out to eat four nights a week. I don’t think it is that hard to judge when someone is living beyond their means.


    I carry no cash and use no debit cards. I put everything on a credit card and pay it off at the end of the month. I have had at least one CC for almost 20 years (1988; most of that time I have had two or three) and have carried a balance over fewer times than you can count on two hands. The only exception was when I bought a car on a CC because I got six months free interest, and when I put our honeymoon on a CC because I got six months free interest. I figured I would use their money for free.

    I am not sure there is a way to use CC debt well. But one can use CCs well. Emergencies is a legitimate use (not an emergency like “We’re on vacation and we just have to go parasailing.”). But emergencies are generally not a wise use of credit.

    Could be.

    I am not for exalting it above others at all.
     
  16. StefanM

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    I just started doing a variant of this. (Although I generally make a few online payments per month, just to make sure I fall within the grace period). It makes balancing the checkbook much easier because I don't have to deal with 10 dollars here, 20 dollars there, etc.
     
  17. TomVols

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    No argument here. However, I just don't know if we're going to get better judges just because people can read a credit report because there's more to the story than just a FICO, Tri-Merge, etc.
    I don't disagree here.
    Well, if a church paid everyone properly is a discussion all unto itself. However, I still maintain that the credit report is not the sum total of a man's financial picture. It's a piece, but not the whole.
    No, that's why I brought it up. But here's a tricky part - CheckScans typically are not as consumer-available as credit reports are. They're like the MCB or an MVR, to an extent, and often not as available, and the laws on who can access them might prevent a typical church from accessing them. Depends.
    Well, I don't agree totally here. I think you're employing a bit of circular reasoning. Without these things you may not be in "debt" now, but you're essentially leaving your debt to your children/spouse if you die and to yourselves if you live. Not wise. I believe saving is a Biblical concept which has just as much stewardship emphasis in Scripture as the proper use of debt. Investing, too.
    Well, but you're a bright guy :) And accounting has little to do with it (although some) but a knowledge of finance and economics. Again, most people are unaware of how closing credit card accounts hurt your scores under most models, for example.
    I know people who do all of this, but do it with cash, and are worse off than people who have some cc debt. Whether paper or plastic, poor financial management is poor financial management. Just because you can pay cash for something doesn't mean you should.
    Interesting that we always leave these out. Car purchases can be voluntary, and just because one can buy a house doesn't mean they should. I know there's a textbook "good debt" vs. "bad debt." But debt is debt to one degree. The people who use HELOCs for vacations, etc., may not have revolving debt, but are to me just as sinfully indebted as the person who runs up a fist full of plastic debt.
    That's one way of doing it :thumbs: I carry no cash but use a debit card. I leave my credit card at home. No impulse purchase (even though I've never been tempted). I've considered doing what you do, but I don't for reasons I explained earlier and some others I haven't explained (tax purposes are a little easier on debit/check than credit - long story).
    Well, I was using both terms equally. I get what you're saying. I think you're an example of using "cc debt" well. I would think my wife and I are, too. The occasional time we let a balance carry has increased our score (RU points) while not really accruing much interest, if any.
    Parasailing? No. However, when in Mexico in the spring, the resort golf course and club rental was a life-threatening emergency! (Just kidding - I balked...and Yes, I have regretted it). I disagree about emergencies. If I'm driving through Texas and my car breaks down, and I can only withdraw $200 from an ATM, then I may need to put the $900 bill on a VISA. So long as that $900 bill isn't still there a year from now (or three months from now) I don't see the problem. Speaking of Mexico, our credit union debit cards would not work in Mexico. (we found out at the POS!). We had no cash on hand, so we did use our CC once or twice on a trip. Then we learned our lesson and took cash from then on. But of course, paid it off (it was less than $50 American) as soon as we got back.
     

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