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Released: May 31, 2012

The credit history underclass

Source: New York Times (Paid Registration)

Millions of Americans with damaged credit records are at risk of being unfairly denied job opportunities by companies that use credit histories to screen applicants. Faced with growing public complaints, seven states have rightly limited the use of credit histories by potential employers. Federal, state and local lawmakers who are considering similar legislation are on the right track. Job-related credit checks have grown increasingly popular, with an estimated 60 percent of employers using them, up from about 20 percent in the mid-1990s. Yet several studies have shown — and some in the credit-checking industry readily admit — that a poor rating does not automatically make a person a poor job prospect or more likely to commit fraud. Very often, damaged credit is the result of a layoff during the recession, divorce or a catastrophic illness.

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