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Low Credit Scores Now Hurting Employment Opportunities

By Sally Maison
Published: Saturday, February 27th, 2010

At the moment, the unemployment rate in the country is way beyond reasonable and analysts say it is going to stay that way for a while now. A lot of American consumers are now looking for work and, unfortunately finding jobs has not been easy for them so far.

Low Credit Scores Now Hurting Employment OpportunitiesAmericans with credit score and financial problems who are looking for a job right now may have to count on another headache that is sure to put a crimp on their job hunting efforts. Now, a few employers are beginning to look at the credit scores of applicants and basing hiring decisions on how good or bad an applicant’s credit score is. Applicants with higher credit scores end up trumping those with lower credit scores.

It seems quite unfair to base on how well an applicant will perform in the job on his or her credit score but, unfortunately, it is completely legal. Right now, employers have the ability to gain access on the credit report of a job applicant. Credit scores, on the other hand are still off limits to them. Employers who deny an applicant based on their credit report are required by law to give a copy of the report to the applicant. That will probably not help the applicant any except to assure them that it is not their skills that is in question but their credit.

As a matter of fact, a lot of people are arguing that the decision by employers to deny applicants because they have lower scores is counter intuitive. Applicants with low credit scores are usually more hungry for opportunities to earn than applicants who are better off. These applicants usually have to pay cash whenever they make any purchases and they will often end up paying more whenever they use credit for their purchases. This means that these applicants have a better motivation to do well on their jobs than applicants with better access to funds or credit.

Still, the final decision on whether to hire an applicant because of his or her score rests upon the employer. For those with low credit scores, the bad news is that employers are more inclined to reject an applicant with bad credit scores instead of the other way around. The best thing for them to do is to try to bring up their credit scores, though, given the current state of the economy, how they are going to do that is the big question.

The unfairness of the situation has not gone unnoticed in Congress however and there are proposed legislations there as well as in various states in the country which will stop employers from making hiring decisions based on an applicant’s credit reports.

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