Ban Credit Checks for Job Applications

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Weathered Help Wanted SignChris at The Consumerist referenced a story this week about how there are 16 states, including here in Maryland, considering a ban on using credit scores to make hiring decisions. Iv’e never personally experienced this or heard of a friend get denied a job because of their credit score, but this happens enough to warrant 16 states barring the practice.

What’s the logic behind credit checks? I’ve read everything from “a higher credit score means someone is more trustworthy” to “someone who has a higher credit score is more reliable,” but I doubt any company can substantiate that with hard data.

If someone wants to hire you because they believe you are the best candidate for the job, they will. If they are iffy about it, then they might use the result of a credit check to help them make a decision even though job performance and credit score are not related. I also agree with Reznik’s quote that “People lose their jobs, that naturally precipitates them getting behind on bills, their credit scores go down, they are trying to find a job to pay off the bills, and employers won’t hire them because of their credit score.” It’s a vicious catch-22.

As an aside, I also like the idea of banning credit checks for job applications because credit scores have become a bit of a joke. Credit scores lose some of their predictive value when they become known because people can game the system. They start behaving differently because they know how things will affect their score so the predictive value of that score goes down.

But, until they pass a law, it’s another reason why you need to review your credit report annually and if you’re itching to know your score, I use Credit Karma (it’s a free TransUnion score, no trial BS, 100% free).

(Photo: dcvision2006)

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108 Responses to “Ban Credit Checks for Job Applications”

  1. almost homeless says:

    I would like for credit checks to be baned in all fifty states. I have been looking for a job for 3 years,I am a honest person never been in jail or did any harm to anyone.I am not a theif.I have worked a temp job for years and they say I am good at it,but yet they dont want be fulltime because I have bad credit but my credit is good enough to be a temp.I cant pay my bills off 11.oo an hour,so yes my credit is bad. if no one will take a chance on me,I will never get a job in my life time.I need a job fulltme to pay my bills.I am a good person with bad credit,but I am a good worker.I feel like my life is over because I cant get a job because of bad credit.I dont know what to do,When no one cares.It is easy for the Rich to say,dont give them a job with bad credit,they wont know intil it happens to them.People with bad credit do not steal.The rich steal more then anyone. Credit checks are to keep the poor and middle class down.

  2. anon says:

    Credit history is not predictive of an employee trustworthiness, however criminal background checks are.

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