Employers checking credit history
ANNAPOLIS | It’s hard enough to find a job in this economy, and now some people are facing another hurdle: Potential employers are holding their credit histories against them.
Sixty percent of employers recently surveyed by the Society for Human Resources Management said they run credit checks on at least some job applicants, compared with 42 percent in a somewhat similar survey in 2006.
Employers say such checks give them valuable information about an applicant’s honesty and sense of responsibility. But lawmakers in at least 16 states from South Carolina to Oregon have proposed outlawing most such checks, saying the practice traps people in debt because their past financial problems prevent them from finding work.
Wisconsin state Rep. Kim Hixson drafted a bill in his state shortly after hearing from Terry Becker, an auto mechanic who struggled to find work.
Mr. Becker said it all started with medical bills that piled up when his son, now 10, began having seizures as a toddler. In the first year alone, Mr. Becker ran up $25,000 of medical debt.
Over 4½ months, he was turned down for at least eight positions for which he had authorized the employer to conduct a credit check, Mr. Becker said. He said one potential employer told him, “If your credit is bad, then you’ll steal from me.”
“I was in a deep depression. I had lost a business, I was behind on my bills and I was unable to get a job,” he said.
Miss Hixson calls what happened to Mr. Becker discrimination based on credit history and said his bill would ban it.
“If somebody is trying to get a job as a truck driver or a trainer in a gym, what does your credit history have to do with your ability to do that job?” she said.
Under federal law, prospective employers must get written permission from applicants to run a credit check on them. But consumer advocates say most job applicants do not feel they are in a position to say no.
Most of the bills being proposed this year resemble laws in Hawaii and Washington that prevent employers from using credit reports when hiring for most positions. The laws contain exceptions in cases where such information could be relevant to the job; for example, if the person is applying to work in a bank or an accounts-payable office.
On a national level, Rep. Steve Cohen, Tennessee Democrat, introduced a similar bill last summer in Congress, where it is still bottled up in committee.
Even though more companies are using credit checks, only 13 percent perform them on all potential hires, according to the Society for Human Resources Management’s most recent survey. Mike Aitken, the group’s director of government affairs, said a blanket ban could remove a tool employers can use to help them make good hiring decisions.
“We are in the great recession and this creates a vicious cycle,” said Maryland Delegate Kirill Reznik. “People lose their jobs, that naturally precipitates them getting behind on bills, their credit scores go down, they are trying to find a job to pay off the bills, and employers won’t hire them because of their credit score.”