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States Outlawing Employer Demands for Credit Checks

Last month Nevada joined a growing number of states and cities that are forbidding companies from using credit checks to make employment decisions. But the practice is still legal under federal law. [...]

Hardest Hit, Hit Harder

Credit checks are keeping more people from getting jobs, according to a recent report by Demos, a public policy organization in New York. This hits people who are out of work and seeking a job even harder: unemployment can cause money problems that lower credit scores even further.

“Credit reports were not designed as an employment screening tool,” according to the Demos report. But federal law allows them to be used that way, and employers have increasingly taken advantage of the information.

The report cites a statistic from the Society for Human Resources Management: 47 percent of employers conduct credit checks on some or all job applicants. But that number is probably on the low side, according to Demos, which adds that one of four, or 25 percent, of unemployed workers say they’ve been screened with a credit check by potential employers.

The first percentage measures employers and refers to applicants. The second is a percentage of workers, and only the unemployed ones. Taken together the numbers indicate that the practice is widespread and affects both currently employed and unemployed job seekers.