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Many Americans Remain Jobless Because of Credit Score

By Sally Maison
Published: Saturday, November 28th, 2009

As the recent economic downfall drastically changed the job landscape of the country, landing a job has become more difficult for most Americans. This is largely because of a new screening method that has emerged, the use of credit score to determine the worthiness of a job applicant.  Employers who check the rating of applicants are growing in number, especially those who are operating in the financial sector. Companies usually do credit check upfront, with applicants having no option but to waive the privacy of their score or lose their bet towards a position.

Poor Credit Shoppers May Have a Cold Holiday This YearD’anne Hancock of the University of Missouri at St. Louis says employers believe that every single detail about a person could significantly affect his job performance because of the current economy and scarce jobs that only push the high unemployment rate to a greater level. She adds that employers see a strong correlation between a person with excellent credit score and stability in the performance of a job. Employers often associate low credit rating with instability and unreliability, which is why they continue to use the criteria when screening applicants.

However, Hancock believes that the use of credit score to assess job applicants is inappropriate today. Five years ago, when the economy was still stable, a person with a low rating can well be considered unreliable, she notes. But recent economic downturns make the old belief inapplicable. She says the housing market has turned upside down and people lost their job with little time to prepare for it, which makes it unsurprising why many people have low credit ratings.

Hancock explains that people who recently lost their job will naturally be unable to meet their mortgage payments and other debt obligations because of their lack of income source. Being unable to pay bills severely hurts a credit score so when reliable individuals with poor ratings hit the job market, they often appear to be untrustworthy.

Credit reporting agencies (CRAs) say they do provide employers with a person’s credit history, but they do not give consumer ratings to employment purposes. But Hancock does not see a clear distinction between the two. She says a person’s history is what determines his score in the first place, so employers can judge an applicant through his credit without taking a look at his rating.

Hancock tells consumers that while it is alright for companies to check their history during job application, it is not legal to be denied a job on the basis of a poor credit score alone.

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