Passing the Equal Employment for All Act: Credit Checks Keep the Unemployed Out of Work

Even by lowering your standards to less benefits and a smaller paycheck, finding another job in the current economic climate is difficult for many. It’s not having the experience – although employers appear to have increased the requirements in this aspect – or the references but, rather, having a poor financial history. As we’ve seen many times on this blog over the past year, credit checks are far more common in hiring – about 60 percent of all employers include it in their background checks – while the unemployed continue fall behind on car and home payments. Those without jobs who have missed payments or foreclosed on a home are essentially kept out of the workforce.

The Equal Employment For All Act, which we discussed last month, might be a solution for this – if it passes. In the meantime, the Arizona Republic illustrated the situation for the unemployed in the state. Those who ended up with plummeting credit scores and blemished history are now kept out of jobs far below their skill level, while the state’s unemployment rate is about 9 percent – the highest in 27 years.

But using or excluding credit history isn’t a cut-and-dry case. Employers have often examined this aspect in background checks as a measure of a candidate’s honesty and work ethic. In this theory, those with solid financial histories would be less tempted to steal from the workplace; additionally, managing your finances well is thought to correlate with motivation and organization on the job.

Much like criminal history should be examined in the context of the job, so should credit history. Positions at the executive level, with a high level of responsibility, and those involving the handling of money should consider financial history; after all, handling money in large or small amounts is part of the job description. But most office jobs, IT positions, and manufacturing work, on the other hand, are too far out of the realm in which credit would be a relevant measure of job performance.