Credit Checks for Employment – Are They Fair?

Today kicks off a new series where we will be looking at some legislative changes that may be coming to the credit card industry. You might have already felt the effects of the changes that are making it easier to build credit, but these new, potential changes march to a different beat. The first topic we want to discuss is credit checks for employment. You may have noticed that employers often run credit checks for employment purposes, and these can decide who gets the job. But is this really fair? Let’s look at the issue from both sides of the fence. If you have a strong opinion or any stories about how credit affected your job prospects, be sure to let us know in the comments below!

Are Credit Checks for Employment Fair?

Have you been denied employment because of a bad credit history? It happens more than you may think, as many employers run credit checks on potential new hires. It’s estimated that 47% of employers do credit history screening, and one in eight do it for every single position. We’ve even heard stories of people preparing for their first day of work at a new job, only to be called and told by a manager, “Don’t come in, we can’t hire you because of your credit report.”

There are two sides of this debate. People who support credit checks for employment purposes argue that credit histories show:

  • Integrity
  • Reliability
  • Important money management skills

On the other hand, those against credit history screening say:

  • It doesn’t take into account that some people have had extreme financial setbacks.
  • It creates a vicious cycle. If someone loses a job and can’t pay bills, their credit might take a hit. Then, they may not be able to get a new job because they couldn’t pay their bills as the result of losing the other job.
  • It is discriminatory. According to the NY Times, “[there are] numerous studies that demonstrate that those black, Latino or simply poor are more likely to have lower credit scores than those who are white and have means.”

Legislation about Employer Credit Checks

As these concerns gain exposure and the issue of credit checks for employment is debated by legislators, expect more states to create laws that protect consumers. Eight states already have laws that limit or ban credit checks for employment purposes and two more, Nevada and Colorado, have laws scheduled to go into effect later this year.

Steps You Should Take

To make yourself an ideal job candidate, learn how to pay off debt so that you are in good financial standing. Also, keep track of your credit report by obtaining a free copy of your report at Remember, this is one of the 3 Simple Financial Strategies You Aren’t Using.

What do you think about credit checks for employment? Tell us your thoughts in the comments below.

Thomas Bright is a longstanding Clearpoint blogger and student loan repayment aficionado who hopes that his writing can simplify complex subjects. When he’s not writing, you’ll find him hiking, running or reading philosophy. You can follow him on Twitter.

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3 responses to “Credit Checks for Employment – Are They Fair?”

  • I was very ill, in and out of the hospital for 6 years with mrsa. I could not work and it ruined my credit. On top of that I now have medical bills in the upwards of 50,000. I find it to be very unfair and frustrating that now I’m looking for a job, but am being discriminated against because of my credit history. No one is there with the employer explaining the tragedy of some people’s lives and how it has NOTHING to do with reliability, workmanship, integrity must I go on!!! Now not only is my credit ruined, now so is my reputation and I cannot get a job or compete with those who have gleaming credit reports. This is very unfair, judgmental, discriminatory, and honesty nobody’s business but yours and your bank.

  • DF Cooper

    They are unfair. They do not accurately show circumstances or project the true integrity of individuals. They also prevent individuals from a fair interview and profile those persons who actually have had catastrophic events in their files. They start and continue a vicious circle preventing employment and as a result cause resentment and anger toward the whole system due to a lack of quality interviews and a true statement of facts. This is profiling and discrimination.

    • Thomas Bright

      You raise some good points. There has been momentum building behind legislation against these types of checks. We will see if that continues in the years to come.