By Jillian Farrel -- March 1, 2010
In an ailing economy with a high unemployment rate, prospective employees are facing another setback: their credit history is being held against some applicants.
The Society for Resources Management said sixty percent of employers run credit checks on at least some job applicants, compared to forty-two percent in 2006.
Potential employers look at credit checks in order to evaluate future employees' credibility, honesty, and integrity; however, sixteen states have proposed a ban on credit-checking.
In effect, employers trap people in debt because their past financial woes have prevented them from employment.
Sixteen states from coast to coast have proposed outlawing most checks. Wisconsin state representative Kim Hixson, drafted a state bill after hearing Terry Becker's story in a struggle to find work. Becker said his financial problems began when his son's medical bills were exacerbated from grand seizures.
In Maryland, the State Chamber of Commerce opposes a bill banning credit checks, because they are interested in debt collections, but not medical bills and school loans.
In over four months, he was rejected from at least eight positions from employers who ran an authorized credit check. Hixson believes that what happened to Becker is considered to be discrimination based on credit history. Hixson's bill would ban similar situations.
Under federal law, prospective employers have to consent to a credit check. Consumer advocates believe future employees don't believe they are in a position to say no.
According to the Society for Human Resources Management's most recent survey, only thirteen percent of companies perform checks on all potential hires. Mike Aitken, the group's director of government affairs, believes that those with bad credit history might not have the maturity to handle a job like processing payroll checks.
Companies tend to give future employers time to explain their credit problems. Consumer advocacy groups are behind this proposed legislation, claiming that credit reports sometimes contain inaccurate information.
