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Poor Credit Report Hampers Job Hiring

By Faye Mergel
Published: Monday, September 7th, 2009

The companies’ practice of checking credit report before hiring a job applicant may have contributed to the cycle of unemployment in the U.S, company surveys observed.

Poor Credit Report Hampers Job HiringIn a survey conducted by the Society for Human Resource Management, it showed that more companies are now including the credit history in assessing the applicants. This trend started in 2004.
Such practice is legitimate as Fair Credit Reporting Act (FCRA) gives companies the right to examine the credit reports of potential employees. 

Dan Wilson, whose company deals with helping employers screen job applicants, support the practice. He said the applicant’s credit report is a reflection of his working attitude – failure to pay his bills may show that he is not a responsible employee. However, he maintained that good credit report is not the main consideration in hiring an applicant. They also check education background and criminal records.

More job applicants complained the companies’ practice on credit report scrutiny. They said their poor credit standing keep them from getting job. In the past surveys, more than 43 percent of companies nationwide often do credit check on applicants. The practice is steadily increasing.
This trend has alarmed some US states representatives as they joined Rep. Steve Cohen, the Tennessee Democrat, in filing a proposed bill that would prohibit companies from using credit report as one of the requirements for employment.

Lawmakers expressed anticipation that the House bill, the Equal Employment for All Act, will be enacted this fall. Business and human resource group opposed the proposed bill, which aims to ban the practice nationwide. They said it helps them evaluate an applicant, who has the potential to fill up sensitive position that has access to companies’ money and information.
According to human resource group, access to an applicant’s credit report helps them see the latter’s financial behavior and how he deals with his responsibilities and obligations. They added that they are not after the credit scores and looking only at the reports on debts and payments.

On the other hand, John Ulzheimer, Credit.com’s head of consumer education, informed job applicants that companies will not have access on credit report without permission. They have to send written notice to applicants asking for authorization for credit check.

He suggested that companies should give an applicant a chance to explain any flaw in his record.
He advised both job seekers and employees should file a lawsuit before the Federal Trade Commission if there is any violation in connection with the FCRA.

However, he cautioned that many may have claimed that they were not hired because of a credit record problem.  It will be hard to prove as employers may claim that applicants were denied employment for some other reasons.

Meanwhile, the Employers Association head, Kenny Colbert, saw an advantage on their part to hire applicants who has low credit score or credit problem because it guarantees that the latter will stay in the job because he needs a steady income.

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