People fall behind on their bills for many reasons — a recession that costs them jobs, a divorce, an illness. Now comes a further obstacle to getting their lives in order: employers who screen job applicants based on credit histories.
A bill before the New York City Council would prohibit employers from using credit histories in hiring except in the very few cases where credit checks are required by law. It would be the strongest such law in the country.
About 60 percent of employers use credit checks to screen applicants, even though research has shown that people with damaged credit are not automatically poor job risks. Besides, the credit agencies that compile and sell records on about 200 million Americans make mistakes.
A report issued earlier this year by the Federal Trade Commission found that one in five consumers who participated in the study had errors in credit reports. In more than 5 percent of the cases, the mistakes were serious enough to lower the person’s credit score, making it likely that more would be charged for car loans or mortgages. If used by potential employers, these erroneous reports could shut people out of the job market.
The City Council put a human face on this problem at a hearing earlier this month. A 30-year military veteran who had been deployed in Iraq testified that he had been turned down for a job as an airport passenger screener with the Transportation Security Administration because of a mistake on his credit report. By the time he got the mistake resolved, he said, the job had been filled. “Even if I did owe the bogus debt,” he said, “I don’t see how it disqualifies me from screening passengers. A credit report does not prove what a person’s character is or is not.”
By using credit histories, employers have created a disadvantaged class that could be permanently locked out of the economy. The City Council could fix that, at least in New York City, by passing this bill.
(Many Employers have no reason to pull someone's credit at all. Especially for low wage jobs where the person won't have access to financial data. Yet 60% of these Employers pull the credit simply because they can. It's only a touch of a button away. The credit bureaus bare some blame for the number of employers pulling credit because they aggressively market these reports now which include all information on a person as sort of a one stop shop of finding out who someone is. This practice needs to be barred."
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