Employment Credit Checks May Stop

New bill may ban credit checks for employment decisions.

If you have a bad credit, a new bill introduced to the U.S. House of Representatives Financial Services Committee could offer at least small amount of comfort and peace of mind for you. US HR3524 was introduced last month and is currently up for committee review. The purpose of the bill is to amend the Fair Credit Reporting Act to prohibit employers from using credit checks for the purposes of employment decisions. Essentially, the information contained in your credit report would have no bearing on your ability to get hired.

 

While there has been some debate over how employers really use a job seeker’s credit to evaluate their eligibility, the practice of running a credit check during the application process is something you’ve probably encountered if you’ve applied for a job in at least the past decade. Although employers don’t reject applicants based on credit score, checking a person’s credit report has almost become part and parcel to getting hired.

This bill would take credit checks off the table entirely when it comes to employment decisions for new and existing employees. Essentially, you couldn’t be blocked from getting hired or find yourself fired as a result of whatever negative information your credit report could contain.

While seekers have rarely complained they can’t get a job because of a bad credit report, it begs the question of why employers really need to check your credit at all. Credit checks may make at least some sense if you’re applying for a job in a financial industry, there is little else a credit report could do to relay any relevant information to the employer. Personal issues like late payments, collections accounts and even bankruptcy filings has limited connection with how well a worker can perform a job.

Of course, that’s not to say that this amendment would negate the reason for yearly credit review – only that if you have a less than stellar profile, you would be able to rest easy knowing that it won’t prevent you from obtaining gainful employment.

We’ll keep you posted on the progress of this proposal and others that may affect your personal finances and the way you manage your credit and debt.