The use of credit history as a factor in job eligibility has been a long-standing issue among consumer advocates, but the rising unemployment rate and decline in Americans’ credit scores has placed the practice in the limelight. Millions of Americans who have been unable to secure employment have been forced into debt and have seen their credit scores drop, further hurting their chances of finding a job. The U.S. Equal Employment Opportunity Commission is currently examining employment barriers and determining whether certain practices are detrimental to the job market.
“An ever increasing number of job applicants and workers are being exposed to employment screening tools, such as credit checks, that could unfairly exclude them from job opportunities,” EEOC Chairwoman Jacqueline Berrien told MarketWatch.
Other opponents have also said the practice excludes certain demographics and ethnicities who tend to have lower credit scores than other racial groups.
“Numerous studies have documented how, as a group, African Americans and Latinos have lower credit scores than whites,” National Consumer Law Center Chi Chi Wu told MarketWatch. “If credit scores are supposed to be an accurate translation of a consumer’s credit report and creditworthiness, that means these groups will fare worse when credit history is considered in employment.”
Legislation that would prohibit employers from using credit reports as a screening tool has been proposed in more than 20 states across the U.S. However, most proposals exempt certain industries from this legislation, including government or state jobs and financial positions.
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