A Bad Credit Score Could Keep You Unemployed
Employers and the EEOC may be heading for a confrontation over the use of credit ratings in hiring.
For jobs involving access to large sums of money or others that involve fiduciary responsibilities, credit checks may be appropriate. But some employers use credit checks on the theory that good credit constitutes evidence of a prospective employer's trustworthiness, even though there is no empirical evidence to support the theory that those with bad credit are more likely to steal from employers or to engage in other acts of malfeasance on the job. This means that credit checks are becoming just another barrier to employment for those most in need of work.
The potential racial implications of credit checks as standard hiring practice should not be dismissed as overblown. The U.S. Chamber of Commerce calls credit checks "just one piece of the puzzle" in hiring. But it's a piece that seems particularly open to arbitrary application. It's worth remembering that employers have been shown to discriminate against applicants based on factors as irrelevant as having a "black-sounding name."
If having the name "Emily" can yield 50 percent more interview callbacks than someone named Lakesha receives, and living in a wealthy neighborhood rather than a modest or poor one increases an applicant's chances of getting an interview, as a 2004 study showed, it's plausible that an applicant with a perfect credit history stands a better chance of being hired than one who is behind in her credit card payments. If, as that same study showed, having a "white-sounding" name is the equivalent, for interview purposes, of having an additional eight years' experience, then how many experience years are added to the application of the prospective employee with a perfect on-time payment record?
It's unclear when or whether the EEOC will take action against the use of credit checks, but in the meantime, state legislatures have begun proposing legislation to outlaw the practice. Illinois and Oregon have already forbidden the use of credit checks by employers. Voters in nearly a dozen other states have begun rallying support for similar legislation. But credit bureaus and business groups are pushing back, fighting to continue using credit reports to decide who is worthy of working and who is not.
Sherrilyn A. Ifill teaches law at the University of Maryland. She is a frequent contributor to The Root.