Limitations on the Use Of Credit History During Employment Applications

The use of credit history checks used by employers during job applications is under fierce debate due to the economic downturn of the past few years. There are currently 25 states actively involved in discussions and 49 bills are being proposed as to whether it is appropriate or even fair that potential employers are allowed to judge an applicant’s “worthiness” based on his or her credit history and score. 

Beth Givens of the Privacy Rights Clearhouse stated that by allowing potential employers to hire someone based on their credit report is consequently allowing employers to make judgments over one’s particular level of responsibility based solely on this credit report. 

Other members and associates of the Privacy Rights Clearhouse said that this form of selection was actually allowing employers to deny people in difficult financial situations and even turn down people from ethnic minorities. 

One particular example of this form of selection process was a Los Angeles resident of African-American decent that lost her job because her medical bills and debt spiraled out of control whilst she was unwell. When she finally did recover from her illness, potential employers were using her recent credit history during the job application process. 

It is quite clear that this form of employee selection is an inaccurate and unfair gauge on someone’s potential as a professional. 

The fundamental concept of a credit check during an application process should be to gauge whether the respective person is responsible regarding his or her finances. However, with the recent global economic downturn, credit checks are a clearly biased method of selecting a new employee. It places the power in the hands of the employer and with over 50 million households in the U.S owing over 800 billion dollars in debt; this leaves a large majority of people in a hindered position during a job application in the U.S. 

There have however been many conflicting arguments to the proposed bills. Elizabeth Bille of SHRM states that the bills are far too generalized to be taken seriously. She states that during the hiring process, credit checks are used during the final stages of many applications and also used for managerial positions in which the credit checks are deemed as necessary.  

Both Trans-union and Experian, the major credit bureaus in America are also opposing the bills. They state that for employers to gauge someone’s responsibility during a job application, employers need to check the credit history of the applicant at the time when they were previously employed. 

There are quite clearly many arguments as to the approval or disapproval of the proposed bills. Credit checks can be used to the advantage of the employer but leaves open a big door for discriminatory practices. Many employers are reported to be using the credit check process with people looking to fill minimum-wage positions and with so many of these people with a poor credit history due their financial status, this process has caused a slow-down in the progression of the working-class and professional citizens of America the economy as a whole.