Credit Report Articles

Amid national controversy over the use of a job applicants' credit information to determine hiring eligibility, the state of Illinois has enacted a law banning the practice.

Employers have long used the information listed on a consumer's credit file as an indicator of their level of responsibility, trustworthiness and in some cases, even honesty. But many consumer advocates have been arguing against this practice, saying that a job applicant's financial status does not determine their job performance. This is especially true if negative information, such as foreclosure or bankruptcy, is listed on a consumer's file for reasons that have nothing to do with money mismanagement, such as a sudden job loss or medical emergency.

As a result, Illinois Governor Pat Quinn recently signed a law prohibiting employers from running credit checks on potential job candidates, according to the Chicago Tribune. With so many jobless citizens struggling to pay their bills, the law is aimed at improving the employability of those with lower credit ratings.

"If you lose your job and your credit is damaged as a result, and employers use your credit to prevent you from getting a job, this is a vicious cycle folks will never get out [of]," Senator Don Harmon, the bill's sponsor, told the Tribune.

The new law will be effective beginning January 1 and will impose legal penalties on those who do not comply with the new provisions. However, some industries will be exempt from the new legislation, namely financial, insurance and state government positions, the Tribune said. The ban will also not apply to applicants seeking positions that deal with matters of national security.

Under new legislation, consumers may also soon be allowed to view their credit scores at no cost if they are denied a loan or a job based on their credit file.

Though many states are making strides in limiting the use of credit scores or credit reports in their hiring or insurance practices, consumers should continue to monitor their credit reports to ensure that all information listed is accurate. This is especially true if they plan to purchase a large-ticket item, such as a home or vehicle, in the near future. Consumers can also boost their credit file by paying all bills on time, limiting their applications for new lines of credit and refraining from using more than 50 percent of their available credit.