NEW YORK (MainStreet) — As if it isn’t hard enough to land a new job with the unemployment rate still stuck above 9%, many employers continue to evaluate candidates based on their credit histories in addition to their employment histories. But dozens of consumer groups are trying to stop this practice.
The AFL-CIO, Consumer Watchdog and the National Employment Law Project joined forces with 25 other consumer groups in calling for TransUnion in particular to stop selling the credit histories of job candidates to employers, noting that these credit checks are a poor predictor of job performance and just as importantly lead to a difficult catch-22.
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“You can’t pay your bills because you’ve lost your job or your hours were cut, and now you can’t get a job because you can’t pay your bills,” the coalition, which aptly goes by the name Credit Catch 22, wrote in a letter released earlier this month calling for TransUnion to stop this practice.
The groups singled out TransUnion specifically because they argue it has lobbied harder than the other two credit bureaus to “promote credit history as a measure of character and suitability for employment.” Yet the groups cite multiple studies highlighting the many errors found in credit reports that could easily skew one’s perceived eligibility for a job, not to mention doubts about the relationship between one’s credit worthiness and their job worthiness.
TransUnion did not immediately respond to MainStreet’s request for comment.
Credit Catch 22 isn’t alone in calling for an end to this practice. More than a dozen states have proposed legislation that would ban credit checks for employers, arguing that it only compounds the difficulty that the unemployed face in finding work, but few of these bills have gone anywhere.
Just how common are these credit checks? One 2010 survey from the Society for Human Resources Management found that 60% of employers ran credit checks on job candidates, a marked increase from the 42% who said so in a similar survey in 2006.
If nothing else, Credit Catch 22’s call to stop TransUnion from marketing these kind of checks may raise awareness among consumers that this practice takes place, a fact that many likely are still unaware of. As MainStreet has reported before, credit bureaus are prohibited from disclosing the job applicant’s actual credit score, but they can show the full report, so if you have filed for bankruptcy, gone through a foreclosure or have excessive outstanding bills, it could be cause for alarm with an employer.
You can find out more about how credit checks can impact your job search in this MainStreet article!
—For a comprehensive credit report, visit the BankingMyWay.com Credit Center.