An End to Credit Checks for Applicants?

On July 9, 2009, Representative Steve Cohen (D-TN) introduced a bill entitled “The Equal Employment for All Act” (H.R. 3149) that would prevent employers from using consumer credit checks for the purpose of making adverse employment decisions.  Florida Representatives Meek and Hastings also sponsor this legislation.  Under the Equal Employment for All Act, the Fair Credit Reporting Act would be amended to prohibit prospective and current employers from using information in consumer reports or investigative consumer reports for employment purposes or for taking adverse employment actions where any information contained in the report bears on an applicant or employee’s creditworthiness, credit standing or credit capacity. The prohibition would apply even if the applicant or employee otherwise authorizes the use of a credit report for such purposes.

2 comments on “An End to Credit Checks for Applicants?

  1. If employers should be permitted to consider information about job applicants that is predictive of work performance, the question then becomes: Is credit history relevant to future job performance?

    A survey of 1331 U.S. HR professionals (Bureau of National Affairs 1995) showed that 25% of the respondents used credit history as a form of reference. This suggests that at least some employers believe that credit history is relevant. I’m not aware of research on the potential link between credit history and work performance. Does anyone know of any?

  2. Thanks for bringing this up. I sincerely hope the Equal Employment for All Act passes. Sure, credit checks might be useful in some cases, but often it’s ridiculous to expect good credit to be correlated with good job performance. Further, credit checks often put potential employees in a catch-22. If they don’t have a job, they are more likely to have poor credit and thus more likely to remain unemployed. People of color on average have lower credit, making this a discriminatory practice. Not to mention that credit reports more often than not contain inaccuracies.

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