Give Us Some Credit

After two years of working in a temporary job as customer-service representative, Debra Banks was offered the job permanently. She was sent a hire letter, set a start date, and confirmed her new salary. But there was a hitch: To get the job, Banks had to undergo a credit check.

They wouldn't be strict, a company representative assured her; after all, Banks had already worked at the firm for two years and consistently received high praise for her work. But when the credit report came back showing unpaid bills from a recent hospitalization, the company rescinded the offer. Her contact at the staffing agency told her the bad credit report was to blame.

Banks returned to temp work, only to yet again be denied a permanent job because of her credit history. Then she was laid-off from the temp position as well. "It made me feel worthless as a person," Banks confesses. "Unfortunately my credit has not improved ... I haven't been able to get a job to improve it."

Banks's case is hardly an isolated one. Today, six in ten employers say that they check the credit histories of some or all prospective employees before making final hiring decisions. This traps many jobseekers in what workplace advocate Nat Lippert describes as a devastating catch-22: They can't attain employment because of poor credit, yet they can't pay off bills and improve their credit without income from a job.

A growing number of states are also taking action to restrict the use of credit checks in employment. Hawaii, Illinois, Oregon, Washington, Maryland and Connecticut have passed legislation limiting the use of credit checks in hiring, firing, and promotions. More than 20 other states, including California, New York and Tennessee are considering bills. The moves are, in part, to help good employees like Banks get jobs they deserve, but also address a more fundamental problem: There's no real evidence that the practice is good for employers, either.