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Equifax Stops Selling Credit Reports to Employers

By Faye Mergel
Published: Wednesday, September 30th, 2009

Equifax will no longer sell credit reports to employers who use the files for applicant screening. The Atlanta-based credit reporting agency (CRA) said they came up with the decision this week, reasoning out that the practice is does not really determine the performance of an employee. There is no law yet that prohibits the CRAs from selling credit reports for employment purposes and the Fair Credit Report Act (FCRA) still allows employers to peek into these files under the consent of the applicant.

Equifax Stops Selling Credit Reports to EmployersAs of March this year, 16 percent of employers check the background of their applicants with the CRAs. That means one out of every six companies peek into the credit report of potential employees. Part of the revenue of Equifax comes from their credit reports “Persona”, which they will no longer sell to companies.

Critics applauded the decision, maintaining their stand that going to the CRAs as part of an extensive background check is not fair for some applicants. Consumer advocates say that continuing the practice is very dubious, especially during the tough economic times. They argue that consumers can get their credit reports tarnished through no particular fault of their own. Among the factors which are beyond the control of consumers but greatly affect creditworthiness are divorce, layoffs, death in the family, business failure, and uninsured medical expenses.

Companies reasoned that they check with the CRAs to further assess the suitability of an applicant for a job, especially if the position offered includes handling of large amounts of money and sensitive information. They add that they use credit reports to verify personal information contained in the resume, so as to prevent any breach. Other employers say that financial troubles may keep an employee from performing in his job well. They go on to say that debt management is indicative of personal responsibility.

However, lawmakers say the pre-employment credit check should be stopped since it only keeps consumers from getting a job, which would finally improve their creditworthiness. Representatives Luis Gutierrez of Illinois and Steve Cohen of Tennessee seek to outlaw the practice through a new bill they are pushing in Congress.

Consumer advocates continue that there are already 4.4 million Americans who do not have a job. If the practice goes on, they expect that more will Americans will go unemployed. This, they say, will only hurt the economy more.
Despite the decision of Equifax, employers can still get reports from TransUnion and Experian. It is still legal under the FCRA, as long as the companies inform applicants about their rights under the said Act.

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