States Move to Ban Credit Screening for Job Applicants

Credit reports weren’t designed to be job-screening tools. But about half of employers now use them when making hiring decisions, according to a 2012 study by the Society for Human Resource Management. The practice cuts across all sectors of the economy, from high-level management to office assistants, home health-care aides, and people who work the counter serving frozen yogurt.

That’s troubling, because the information contained in a credit report doesn’t necessarily say much about a person’s ability to perform at work. The progressive think tank Demos, which published a report on employer credit checks in May, found that people who have bad credit are more likely to have somebody in their household who is out of work, lacks health insurance, or has unpaid medical debt. Demos argues that difficult economic circumstances aren’t a good—or fair—reason to deny a job to a qualified person.