Do Workplaces Discriminate Against Potential Employees With Bad Credit?

Mar. 17, 2015

Dear Cathy:

Do you have info relating to the discriminatory hiring process on employers refusing to hire based on personal consumer credit?  Bad Credit, Utah

Dear Bad Credit:

Credit information provides insight into an applicant’s integrity and responsibility towards his or her financial obligations.  The 3 credit bureaus (Experian.com, Equifax.com, TransUnion.com) have been helping employers make better employee hiring decisions by quickly and cost-effectively providing objective and factual credit information. 

The Fair Credit Reporting Act, as amended by the Consumer Credit Reporting Reform Act of 1996, allows employers access to a consumer's (potential employees) credit report for employment purposes.

The law requires prior to pulling a consumer’s (potential employees’) report, they provide a separate, written document to the consumer disclosing that a consumer report may be obtained for employment purposes and obtain written authorization from the consumer for pulling his or her consumer report.

Prior to taking adverse action, based in whole or in part on the consumer report, the employer should provide to the consumer a copy of the consumer report and a summary of the consumer's rights as prescribed by the Federal Trade Commission (FTC.gov) ("Consumer Rights") .  The employer must not use a consumer report in violation of any applicable federal or state equal employment opportunity law or regulation. 

These employment decision-making tool has been in place for quite some time but we did not see the full scope or severity of it until the 2007/08 financial and housing crash when many employees were denied jobs because of their credit.

What’s unfortunate is according to many financial experts, at least 79% of all credit reports have some type of error; 25% have serious errors; and 20% list old accounts that should have been closed.  Potential employees who apply for jobs dealing with credit and finances, along with many city, state and federal law enforcement officers will be denied jobs because of their bad credit.

Again this is the new law of the land so your only options are to apply to jobs that don’t require a credit background check or clean up your credit by ordering a report from all 3 credit bureaus at http://www.AnnualCreditReport.com.

If you feel you were discriminated against because of your credit or if misinformation was used to deny you employment, then you always have the right to file a lawsuit against that company.