Credit Report Articles

Hearings Debate Employer Credit Checks

Credit checks help many employers determine a candidate's eligibility to fill a certain position. Last month, the House Financial Services Committee discussed the Equal Employment for All Act, legislation that would make this practice illegal. This week, the Equal Employment Opportunity Commission plans to hear testimony about the practice. In sum, the Equal Employment for All Act would make it unlawful to base adverse employment decisions against prospective or current employees on consumer credit reports.

In last month’s meeting, representatives from various agencies argued that the legislation ‘as is’ could put employers at risk, by eliminating credit checks even when it remains significant to the job. For instance, the current legislation still prohibits credit checks on jobs similar to financial institutions and when it can be shown that the information is related to a specific job. Attorney Don Livingston, on behalf of the U.S. Chamber of Commerce added, "the proposed legislation would…needlessly prevent employers from using credit checks that are justified by business necessity."

Unfortunately, it’s a catch-22 for the unemployed, because often times their finances only spun out of control originally after losing their job, and getting a new job can rely on passing a credit check. For instance, many unemployed individuals come to lean heavily on credit cards to make ends meet. However, relying on credit can lead to debt or accounts going delinquent or into default (failure to pay). Some states have already outlawed the practice of employers running credit checks: Illinois, Oregon, Hawaii and Washington.

If you are unemployed, there are ways for you to improve your credit score on a limited budget. For example, evaluate your monthly expenditures and identify areas where you can cut back spending. Consider putting the money you save toward repayment of delinquent credit card bills. Accounts with delinquent payment can drastically reduce your credit score.