Bad Credit Affects Jobs Not Just Mortgages and Home Loan Refinance

25 states are proposing 49 debatable bills to give restrictions to employers who are using the job applicant’s credit histories in the hiring process.

According to the National Conference of State Legislature’s analyst Heather Morton, the bills passed concerning credit standing and employment are the response of legislators to the effect of recession on employment. The Privacy Rights Clearinghouse director Beth Givens further added that the legislature’s bills result from the growing concern on fairness. Givens says that the decision to hire based on an applicant’s credit report is a value judgment that is somehow sending the message that the applicant is an irresponsible and careless person because of a poor credit standing. This is an unfair basis for employment especially for people of color says privacy and civil rights advocates.

In the state of California, the combination of foreclosures and a 12.4% rate of unemployment have negatively impacted the credit scores of its residents. This is according to Tony Mendoza, the state’s assembly member responsible for California’s bill. A credit report is an unfair basis for job acceptance, added Mendoza. Despite this fact, 60% of employers in the U.S still perform credit checks on their job applicants says the Society for Human Resource Management.

The top bureaus namely Experian and Trans-Union oppose the bills. They say that it is an employer’s prerogative to know if their applicant had been prudent in their previous employments. Trans-Union spokeswoman Colleen Tunney-Ryan further adds that the credit report can be used as a tool to assess the employer’s job applicants. The chairman of Credit.com Adam Levin says that job applicants must be prepared to answer any questions related to their credit when applying for a job.

Although the associate counsel for SHRM, Elizabeth Bille says that credit reports are mostly used in the latter part of the hiring process and for managerial positions, Nat Lippert, a research analyst of a labor union says otherwise. According to the analyst, more employers are using credit reports to hire people for low-paying jobs, the jobs that are sought for by workers of color. Credit report as a hiring tool should not be used because of its discriminatory impact added Lippert.

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