Monday, January 25, 2010

Why Should Your Credit Score Prevent You From Getting a Job?

By Delegate Kirill Reznik (D-39).

We have deemed the current economic crisis “The Great Recession.” Unemployment is at staggering levels, as are foreclosures and bankruptcies. As a result, credit scores are suffering.

For those of you who don’t know, your personal credit score is determined by an oligopoly of three national credit rating agencies: Equifax, Experian, and TransUnion. These companies are the sole arbiter of your credit score, and as a result, single-handedly determine whether or not you are able to buy a car, buy a house, and yes, even get a job.

The reason is because they offer to sell your credit report and credit score to employers who want to do background checks on potential new hires or existing employees. The use of these reports by employers is, for a variety of reasons, going up exponentially. Research indicates that as many as 43% of employers purchase credit reports.

Currently, federal law allows this, though they do not directly allow or disallow it for the purposes of hiring and retention. Federal law also requires that the employee or interviewee must give permission to do the check and be given an opportunity to explain any adverse notations on it. Imagine this situation – you go in for an interview and are told “to get this job, we need you to give your permission for us to do a credit check. Here, sign this.” Though completely voluntary, can you imagine someone not signing? And then, that same applicant has to sit before their potential future employer and explain why a divorce, medical bills, or other personal matter caused him or her to have a bad credit score.

Studies show that you have the same chance of picking responsible employees by choosing them at random from a stack of applications as you would using someone’s credit report as a determining factor.

Though we cannot openly ban the practice because of federal law, we can definitely restrict it, and we should. In these times of unemployment, rampant foreclosure and bankruptcy, we need to make every opportunity available to people to get jobs and get their lives back on track.

I have submitted legislation this session to prohibit employers from using a credit score or credit report in hiring or retention, and am working with Senator Mike Lenett of Montgomery County and Senator Catherine Pugh of Baltimore to help me make the case on the Senate side. We have received a very positive response and look forward to this very simple and pragmatic bill becoming law.