Elizabeth Warren Calls For Ending The Use Of Credit Checks To Deny People Jobs

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Bad credit can happen to anyone for a variety of reason that are beyond their control, Certainly pre-Obamacare, a family member’s illness also meant economic collapse for people who weren’t born with multi-million dollar trust funds. The same holds true, when a family’s primary bread winner dies, or a marriage fails.

During the last Republican manufactured recession, millions of Americans went from middle class earners who saw their jobs and the economic stability that went with them disappear. Even if one makes all the “right” choices and works hard, expenses can exceed available financial resources.

When there is a major loss of income or reduction in income, too often, it means people fall behind in paying their bills and that can have a negative effect on their credit scores.

As Senator Elizabeth Warren and Rep. Steve Cohen point out in an op-ed for Time, credit reporting companies pushed the narrative that there is a nexus between credit history and a person’s character.

Credit reporting companies that sell Americans’ personal data to potential employers have pushed the narrative that a credit history somehow provides insight into someone’s character. But, as even a representative from the TransUnion credit bureau admitted, they “don’t have any research to show any statistical correlation between what’s in somebody’s credit report and their job performance.” In fact, research has shown that an individual’s credit has little to no correlation with his or her ability to succeed in the workplace. Credit reports are not a way to screen out bad potential employees; they are just a way to discriminate against people who have fallen on hard times.”

Despite facts, pushing this narrative isn’t hard to do when corporate America is already predisposed to believing that financial status and character go hand in hand.

This belief goes hand in hand with wide support for a reality show star turned Republican Presidential Candidate. While bluster and breaking the “rules” of politics play a role, conservatives also believe wealthy people are morally superior to people who are not. Therefore when Donald Trump says he’s rich and therefore the best presidential candidate, people buy it.

According to a 2012 survey, by the Society of Human Resources Management, 53% of employers said they don’t do background checks on job candidates, while a whopping 87% said they do check the credit histories of job candidates.

The survey tells us that the companies that sell credit history information successfully pushed the myth that one’s credit history provides more insight into their character than a background check does.

As if that wasn’t enough, credit score information can be inaccurate and the companies who create that information then sell it to employers are notoriously slow to correct inaccuracies.

In 2013, the Federal Trade Commission reported that as many as 1 in 5 consumers identified at least one error in their credit reports.

The result is discrimination based on a myth and inaccurate information, that effectively shuts people out of the job market. As Senator Warren and Rep. Cohen pointed out in their op-ed, this practice which affects millions of Americans is fundamentally unfair.

For hardworking people struggling to make ends meet, the only way to get back on their feet is to find a good job and earn a paycheck. But even when they are able to sell their homes—often at a loss—or after they are forced to close their business’ doors or find temporary work, that bad credit history continues to haunt them.

And despite the often-desperate effort to find a job, many employers are unfairly shutting the door on applicants with less-than-stellar credit. We should call this what it is: discrimination.

Taken in a broader context, the practice of using credit histories as a factor in hiring further rigs the system against people at the bottom.

It’s a cruel and vicious cycle that Senator Warren and Rep. Cohen want to stop with a law called the Equal Employment for All Act. Make no mistake, this practice further rigs an already unfair system against hardworking and honest Americans who need a job, more than they need an Ayn Rand-style lecture on the culture of work.

12 Replies to “Elizabeth Warren Calls For Ending The Use Of Credit Checks To Deny People Jobs”

  1. …pity the Goppies are GUARANTEED lifetime employment as lobbyists and Corporate Executives…
    …no false equivalency allowed!!!

  2. Finally! It is completely stupid but some how perfectly conservative to deny some one a job who NEEDS it to IMPROVE!!! their credit score. 20 years ago I found something on my credit report that had been COMPLETELY PAID TEN YEARS before!! And TODAY it is still on my report after a myriad of phone calls and reams of letters of PROOF of payment. But better yet ALL credit reporting companies need to go away!!

  3. My husband was denied employment because of his credit report. Since the job had to do with handling money, the employer said that people with poor credit scores could not be trusted with money, since they could be easily bribed.

    The most common reason for a poor credit score is medical bills, coming in a close second is student loan debt, both of which show NO indication of a person’s character or how responsible they are.

    If you have a low credit score, it’s most likely because you’re poor, not because you’re irresponsible. Some landlords won’t rent to people that have a low credit score, which is idiotic because late or unpaid rent bills do not show up on your credit report.

  4. Interesting. There are other stereotypes that harm a person beyond repair. Despite at-will stating that no reason is a valid reason to fire an employee, companies always inquire about it. The same goes for quitting a job.

    The kicker is that they seek long term relationships, but ditch all responsibilities that a long stable relationship would imply. It is a stable position as long as the company finds it convenient.

    Also, why not starting to end Corporate Welfare? Corporations received 150 Billions in Welfare in 2014. Yet some people, several to be exact, blame the unemployed and those in dire need for ”consuming” Taxpayer resources.

    Anyway, the one proposed is already a good start!

  5. Why on earth should any potential employer know your credit score. To me, that is a violation of privacy. You are “pegged” beforehand because of a low score. If you are looking for a job, especially in the past 7 years because you were laid off or your company went down, of course you will be late on your bills if you have no income. Its total BS to deny a person a job because of their credit score. Insurance companies such as car insurance also use the score.

    It is getting so Americans don’t stand a chance..you are damned if you and damned if you don’t.

  6. About time. Credit reports should be banned unless it’s directly related to the job. Eg a credit check for an applicant for a controller’s job.

    Unfortunately, credit reports would still keep people out of jobs that require security clearances, which often pay more than the same jobs in unsecured employment.

    The personnel security process reads all kinds of stuff into credit reports: people with bad credit info are careless, unreliable, or irresponsible; people with money problems are vulnerable to bribery and coercion; people who show extravagant spending patterns might be susceptible to embezzlement and bribery; unpaid debt to the government may indicate un-American sympathies or contempt for the U.S.; changes in spending patterns may indicate an inflow of dirty money. There’s just a soupcon of paranoia in there.

  7. What is truly scary is now you can go on the web and get anyone’s personal history. Had a divorce they know it. Been arrested for a misdemeanor they know it. Its not the NSA I am worried about its the private companies that know just about everything about you and will share it for a price

  8. This is the American tool they use against the less fortunate because they choose to kick a man when he’s down while they get rich & richer & the poor get poorer.

  9. National income has been dropping yearly. The labor participation rate is at a 40 year low. For the first time more businesses close than are started. So yes. The poor are getting poorer. And they are not the only ones.

  10. I worked in middle management at Trans Union when the PEER report (Pre Employment Evaluation Report) was developed. I was an outspoken opponent. My history before the credit bureaus included developing a score in tandem with Fair Isaacs who developed the bureau scoring models.

    The PEER report ONLY used the credit data base. Yet they suggested that these reports could help stop people from stealing. A person’s credit does not predict their psyche or potential for criminal behavior….

    PEER only activated a response if there was an item of public record on the file. (Judgement, tax lien, bankruptcy). But many government entities use abstracts of judgement which never got in front of a judge…

  11. The credit bureaus also have scores that are supposed to predict the potential of your committing fraud against an insurance company.

    Once again..there is no overlapping of a fraud database…public defenders data base…or police records.

    Once again someone is saying that, because you defaulted on some loans when you were laid off…or because your family was hit with 100,000 in medical bills that you had to pay and you missed some payments, you are now considered a high risk to steal from them.

    In 1989 when these scores came out, I expected huge class action lawsuits..or civil suits for defamation of character…When they didn’t come, I figured that people just didn’t know these “gold stars on the jacket” existed

  12. Oh, the hell with it, just draw and quarter all the louts at these so-called credit reporting companies. None of them is worth a mouthful of spit.

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