The rationale behind the ban is simple: it’s unfair and useless to use a person’s credit history, which is often inaccurate or misleading, when assessing their job qualifications. When corporations use massive data screenings to hire and fire en masse, credit checks can drastically narrow an applicant pool and subsequently be held as a cudgel over desperate job seekers and compel them to expose private background information.
There’s nothing meritocratic about this practice. But it is racially biased, and very cruel to the poor.
According to the think tank Demos, a negative credit record is associated with many of the disadvantages of being poor, jobless, not white, or in poor health—and not with how trustworthy you are or how well you write computer code or repair a car. But since employers can generally pull up credit data (which has historically been used for actuarial determinations of financial risk, not intended for employment-related decisions), this information can easily be misinterpreted or manipulated. By providing convenient proxies for race and class, data can become a tool to simultaneously affirm and perpetuate negative stereotypes of workers based on arbitrary factors.