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Should Employers be Barred from Using Credit Reports in Hiring?

CBS MoneyWatch

Job-hunters are increasingly being asked to agree to allow potential employers to view their personal credit information, a development that Sen. Elizabeth Warren says is unfairly keeping people out of the job market who've had financial setbacks or have reports that contain inaccurate information.

The Massachusetts Democrat today introduced The Equal Opportunity for All Act in Congress, which would outlaw such credit checks in many cases except in areas such as national security. Warren told reporters in a conference call sponsored by the Demos Foundation, a liberal think-tank, that the legislation was long overdue. 

"This is about basic fairness," said the first-term legislator, adding that many people have had their credit records tarnished during the recent economic downturn. "There is little to no evidence of any correlation between job performance and a credit score." [...]

"The use of personal credit history to screen job applicants illegitimately obstructs access to employment, placing an unnecessary obstacle in the path of job seekers who are often already disadvantaged by racial discrimination, disability status, lack of health coverage, unemployment and other economic challenges," wrote Amy Traub, a senior policy analyst with Demosin a research brief

Bad credit also often stems from extended periods of unemployment, as well as from high levels of medical debt and lack of health insurance, according to Demos