Civil Rights, Labor Advocates Demand End To Employment Credit Checks

WASHINGTON -- A coalition of 25 civil rights and labor advocacy groups petitioned one of the nation's largest credit-monitoring firms on Tuesday to quit selling consumer credit info to employers.

Using credit histories to screen job applicants, the groups said, can trap the jobless and disproportionately burden black and Latino candidates. They want TransUnion, one of the Big Three credit companies alongside Equifax and Experian, to stop making credit reports available.

"As the only privately-held company of the big three, TransUnion has the ability to stop this practice overnight without worrying about stockholder reaction," said UniteHere spokeswoman Anne Marie Strassel.

Roughly 60 percent of companies factor credit information into hiring decisions, according to a 2010 survey by the Society of Human Resource Management, which supports the practice. The rate of employment credit checks increased from 35 percent in 2003 and 19 percent in 1996.

"Employers understand that individuals, who have been unemployed as a result of these difficult times, may have also had difficulty keeping up with their financial obligations," TransUnion spokeswoman Colleen Tunney-Ryan said in a statement. "What employers are interested in, is whether an individual acted prudently while he or she was employed. A pre-employment report is one tool to help them assess that."

There is no data reflecting how frequently job applicants are passed over because of bad credit.

HuffPost readers: Turned down for a job or a promotion because of crappy credit? Tell us about it -- email [e-mail]. Please include your phone number if you're willing to do an interview.

On Monday, California Gov. Jerry Brown (D) signed a bill banning most businesses in the state from using credit checks to screen potential workers, making California the seventh state to restrict the practice. TransUnion has lobbied against state efforts to curtail its business.

The Equal Employment Opportunity Commission, which is currently suing two companies for reasons related to credit checks, held hearings on the practice last year. "The EEOC is concerned that not hiring people with poor credit may exclude qualified job seekers and some minority groups, and therefore may be discriminatory under civil rights law," EEOC spokeswoman Christine Nazer said in a statement to HuffPost.

"Employers need to show that the use of credit records is job-related and consistent with business necessity," Nazer said. "Moreover, credit history screening is an area where job seekers may not even know why they didn't get a job, and we are interested in looking closely at whether there may be possible discrimination because of a disparate impact on certain protected groups."

The coalition of groups opposed to employment credit checks says credit scores for black and Latino workers are 5 to 35 percent lower than scores for white workers. They also say credit checks are an unfair criteria for the unemployed because people without jobs to pay the bills are more likely to have negative items on their credit reports. (Some employers simply won't consider jobless applicants at all, a form of discrimination President Obama wants to ban.)

"We believe these barriers are a contributing factor to the drastic unemployment numbers we see for people of color," said Barbara Arnwine, director of the Lawyers' Committee for Civil Rights Under Law. "These credit checks are often used as disguises for other kinds of racial bias."

The businesses surveyed by SHRM said they were most likely to check credit histories for potential employees whose jobs would include financial responsibilities. Outstanding liens and judgments were the credit problems most likely to cause an applicant to be turned away. A business can't run an applicant's credit history without his or her permission.

Arthur Delaney is the author of "A People's History of the Great Recession," HuffPost's first e-book.

Comments

[logdog]

02:00 PM on 10/20/2011

If I were borrowing money from my employer, then yes they have a right to check my credit history, but not if I am seeking a job. I can see why they need to run a criminal back ground check, etc, but Credit Report, that's a Civil Rights Violation!
It appears as though they are now able to determine the ethics of a person by merely looking at their credit report. If this is the case they should also investigate a person's religion and sexual preference. Do they even believe in God? (43% of all Atheists & Agnostics don't really care about anything).
We should also find out how many times a potential employee or Independent contractor has been divorced, re-married and if they cheated on their spouses. (57% of all people who have cheated on a spouse(s) are likely to lie & cheat on their employers).
How many parking tickets has a person had in the past? (51% of all parking ticket offenders do not respect authority).
Is this person a Republican or Democrat? (47% of all Democrats are more liberal than Republicans and may show out of control spending tendencies, in an effort to pay down the bills of their Republican predecessors).
Insurance Companies try to pass a bill that would enable them to raise your insurance premiums, based on your credit report.
Last but not least, 67% of all employers have credit reports that are lower than 85% of their employees.

[Jackfessender]

10:35 AM on 10/13/2011

Credit scores should be publicly available, in fact there should be a computer embedded in everyone's forehead telling the world what their credit rating is.

If what people say about credit scores and how it correlates to a person's moral judgment is true, and it is, then...

A surgeon with a low credit score is more likely to kill you and steal your organs and sell them on the black market

You are more likely going to sodomized, murdered, and cannibalized by a person with a low credit score

Having low credit is genetic and it is the same gene that produced Adolf Hitler and Ted Bundy

I won't feel safe until the credit score head computer thing is enacted and enforced on all Americans. FACT.

[rogergoldkin]

06:26 AM on 10/13/2011

And folks wonder why there are OWS protests!

[Mister Grumpy]

10:25 PM on 10/12/2011

If you've tried buying auto or health insurance lately, many companies won't give you a quote unless you sign a release allowing them to check your credit. What does your credit score have to do with your health condition or driving habits? Nothing! !

[Elk Hunter 1]

12:53 AM on 10/13/2011

Not much, but it does say something about how one pays their bills.

I guess it says more about if they pay thier bills.

[PalinEffect]

08:57 AM on 10/13/2011

It ought to be illegal to use this for car insurance rates. If I don't pay on time, a $10 fee is imposed. If I don't pay at all, NO INSURANCE. Very simple.
Why should the insurance cost more based on credit score?

Laws are being proposed to make it illegal to run credit checks on prospective employees, except of course for jobs such as credit card CSR work, banking, etc.
Other jobs - none of your dam n business.

[PerriCite]

08:40 PM on 10/12/2011

There have been a lot of really st*pid comments, particularly from Ed Baker. The reason MOST people want a job is because they need the income. Income to support themselves and their families. To suggest that someone with a 10 year negative credit history is a risk is st*pid, particularly in this economy.

A neighbor lost his job, his home, and his wife who finally died after a long illness. It took well over 10 years to get his personal finances in order. Fortunately, his new employer relied on the content of my neighbors character rather than the numbers on his credit report. As Ed Baker alleges to be a minority, he, of all people, should understand that.

[Bruce84391]

07:56 PM on 10/12/2011

I totally agree employers should not be able to see credit information. Maybe we should all trade mark our name and make credit agencies pay us to use our information. That would amusing.

[Spock]

07:04 PM on 10/12/2011

I tried to get a second job recently, a menial job. To my surprise I was told a criminal background check, drug screening and credit check were required. With the job I have today I was pretty much asked "When can you start." and I got the job. That was back in 2002. Since then, as with health insurance, it seems like corporations try to make things more difficult for the average person.

[blewvelvet]

06:45 PM on 10/12/2011

THANKS banks, credit companies and corporate cronies for making people that had to rely on YOUR high charge rates to go into debt to survive....TO go into MORE DEBT by denying them a job.

Real Bright!

[Elk Hunter 1]

12:56 AM on 10/13/2011

I only have 1 credit card through my credit union. It's not that high, and it doesn't have any balance.

Do you really think you have to go into high debt to get good credit? There are lots of ways to get a good score with very little debt and very little risk.

[fortressfountain]

03:56 PM on 10/12/2011

The reason credit and any kind of check is performed is so agencies and government can make money. It is nothing about the candidate.
This is an unfair check-as a lot of people can be bailed out of debt by thier parents, spouses or friends etc.
The person who has bad credit may just not be able to get a hand out.
Oh I forgot it is not a handout if you are of the elite.

[ShanaJuly]

01:46 PM on 10/13/2011

EXACTLY...BINGO.

It is ALL ABOUT THE BENJAMINS, PERIOD...

[Andy Kolk]

01:35 PM on 10/12/2011

The credit check for employment is a sneaky way the employer is checking if there are medical problems which would raise the cost of health insurance for their employees and benefits provided by the company. This is the secondary discrimination that is going on.

[dimplesmile7]

12:24 PM on 10/12/2011

Many people that steal can pass a credit check. Many CEOs and Wall Streeters that robbed company employees of their 401K had good credit too. Credit checking is no guarantee that a person won't steal.

[Ed Baker]

12:22 PM on 10/12/2011

As an employer, this information is very valuable to me.

The credit scores are really not that important, the scores only provide a snap shot of the relative financial condition of the applicant at the time the report is pulled. The 10 years of financial history are much more telling than any resume, or interview could possibly be.

Other information on the report allows us to tell if the applicant is lying about his work history. If he claims he was comptroller of ACME Industries in Boston at a time when his home address was in Seattle, we can ask him for an explanation.

If the applicant has a 10 year history of poor financial performance, this tells me that there are judgment issues, and possibly character issues.

If I ask the applicant to explain negative items on his report, his response will also reveal to me many things, whether he takes responsibility for his own failures, whether he tries to blame others, whether he's learned from prior mistakes, and what I can expect from him when he's confronted with errors in his own performance at work.

[Spock]

06:04 PM on 10/12/2011

A backdoor tool to discriminate and to keep the unemployed, unemployed.

This practice needs to be banned.

[Elk Hunter 1]

01:06 AM on 10/13/2011

You don't really understand much about how people hire.

When a person is responsible for the hiring of employees to any company or business they are (to a small degree) responsible for the employees performance. If there is a HR person who is hiring horrible people over and over again they will lose thier job, if they are hiring great people they will probably be promoted or at least rewarded.

This will make people want to hire those who are best for the job. Not those who need the job the most, or those who have been out of work the longest, but the person who is best for the job. Maybe you feel that it isn't "right" to do it that way, but every company has the right to protect the company's best intrest. Which would be hiring those who are going to do the best job for them at the best price.

I don't believe for a min that anyone has not been hired only because they are already unemployeed. I have too many friends and family members who do nothing but hire people for a living. I know a little about how they think and do thier jobs.

[Ed Baker]

10:57 AM on 10/13/2011

We don't need a credit report for that - we verify their work history from their resume and application documents.

Our firm is not currently hiring the unemployed.

[PalinEffect]

09:01 AM on 10/13/2011

A good solid punch in the face would seem to me to be the appropriate response. I would have a spare shirt and tie ready.

[Ed Baker]

12:54 PM on 10/13/2011

Punching me won't get you hired. Grow up.

[cate58]

11:47 AM on 10/12/2011

True story: years ago I applied for a relatively minor position at the local ACLU office. I refused to allow them to perform a credit check as a pre-employment (actually, pre-interview) criteria. I was informed by the Executive Director that I would then not be considered for the position. I will readily submit to a pre-employment criminal background check but to say that someone is pre-disposed to criminal activity based on a credit check or that they have a moral failing that would prohibit them from performing their job due to bad choices in how they allocate their spending. That's wrong.

[Ed Baker]

12:00 PM on 10/12/2011

The report tells a prospective employer quite a bit about you. There are few things as personal as money, and how one handles it demonstrates a lot about how they handle responsibility. It goes to judgment, to commitment, organization.....

10 years of financial history provides a great deal of insight, much more than a criminal background check, much much more than a resume and interview.

[cate58]

01:18 PM on 10/12/2011

Sorry, I disagree. I have always excelled at my profession(s) and received accolades for my work including raises and increased responsibilities and titles. I have worked tirelessly to accomplish the employer's goals with a high degree of professionalism. Actually my poor credit history has more to do with the fact that I don't much care about money as anything else. If I am earning less (as I have when I worked for nonprofits I believed in for a weekly stipend for a year or two each time) I lower my expectations and find joy in visiting the dollar store or a certain flexibility in scheduling that occurs at nonprofits. When I earn more in line with my experience and education at a for-profit organization I tend to compensate for the intense time commitment by spending more - often on eating out and buying new work outfits because I don't have as much time to cook or do laundry or I'm traveling a lot. So, your statement is not true in my case and I suspect many others.

BTW, the main cause of financial troubles is medical bills. Just what you want a prospective employer to see. Do you really think that someone who has had past high medical bills will get hired? No, the company will generally move on in fear of rising health insurance premiums.

[jumperpin]

11:36 AM on 10/12/2011

Your credit history should be as private as your medical history. Yep, we need more "onerous regulation" here.

[Ed Baker]

12:22 PM on 10/12/2011

Yeah, we should just put all the applicant's names in a hat and draw them out by lots.

[MrsBeale]

01:33 PM on 10/12/2011

Why do you make such a ridiculous leap? What is wrong with checking references to verify an employee's work history and reliability?

Most employers won't even interview you if you don't have good credit. Therefore, if your credit has been damaged through no fault of your own - e.g., identity theft, joblessness, medical issues, etc -- there will never be an opportunity to explain. Business has never been able to show any statistical relationship between credit history and job performance or honesty.

[Vic22]

11:10 AM on 10/12/2011

Do you want to know what is really stopping the recovery. When companies refuse to hire the unemployed, and they refuse to hire people who were adversely affected financially by the recession. That means, many of the hundreds of thousands of jobs we see advertised every day are going to people who are already employed, instead of people that need the jobs. Instead of adding new jobs, we are just moving jobs around. Sounds like the same thing Wall Street does with money

[spinotter11]

11:34 AM on 10/12/2011

Whether the jobs are offered to unemployed people or to those who are already employed, the total number of people who are working will not change.

[Vic22]

11:41 AM on 10/12/2011

If you give a job to an umemployed person, that is +1 job. if you give one to an already employed person that is 0 net jobs

[Ed Baker]

12:10 PM on 10/12/2011

Financial setbacks are shown in nearly 100% of the reports we pull for applicants. The credit score isn't much use to us. The history is the information that is most telling.