Like many New Yorkers, Hazel B. of Queens struggled to get by after she was laid off from her job as an accounts receivable administrator. A single mother of two, Hazel relied on credit cards to make ends meet while she looked for work.
Finally, she found a job opening that looked promising. She went on two interviews and took a test given by the potential employer. She believed she had performed well, but then word came back that Hazel would not be hired because of negative information in her credit report.
The debts she ran up while unemployed would now prevent her from getting a job.
Hazel’s plight is disturbingly common. Whether they’re looking for a job walking dogs or trading bonds on Wall Street, New Yorkers from all walks of life are finding their path to employment blocked by their credit history. With more than 360,000 city residents out of work, credit checks have become a barrier to employment that no one can afford.
Today, the City Council holds a hearing on the Stop Credit Discrimination in Employment Act, sponsored by Council member Brad Lander, which would help ensure that all job-seekers have a fair shot at gainful work.
Credit reports were never developed for hiring in the first place; these records of an individual’s borrowing history were intended for lenders to make decisions about how likely someone is to pay back a loan. But when companies selling credit information saw a new customer base for their product, they began marketing reports to employers — even though credit checks have never been proven reliable for hiring.
As a spokesman for credit reporting behemoth TransUnion acknowledged, “At this point, we don’t have any research to show any statistical correlation between what’s in somebody’s credit report and their job performance or their likelihood to commit fraud.”