Unemployed? Blame Your Credit Report

You passed the phone interview with flying colors. You nailed the in-person meeting, impressing your potential boss with your expertise. Your references all gave favorable reviews of your past work performance. So why didn't you get the job? The answer could have nothing to do with your skills or capabilities. You might just have bad credit.

Employers are increasingly interested in uncovering your credit history before deciding to hire you. According to a 2006 poll by the Society for Human Resource Management, 43 percent of member companies run credit checks on at least some of their job candidates. In 1998, that figure was only 25 percent. Imagine what it is in 2010.

For a jewelry store, perhaps, credit checks on potential employees would make sense. If someone's desperate for money, they may be more willing to pocket a diamond or two — or so goes the reasoning.

"Bank tellers, CFOs (chief financial officers), controllers, people who work for brokerage institutions" — these are the types of employees who should undergo credit checks before being hired, according to William Greenblatt, a labor attorney and the CEO of a background-checking service, who talked to MSN. Employment attorney Manesh K. Rath agrees: "There's a perceived correlation between a high debt load and the possibility of embezzlement, theft or malfeasance."

But what about a coffee shop? A health clinic? A supermarket? The Transportation Security Administration, which rejects airport screener applicants if they are more than $5,000 in debt? These types of businesses, which don't deal directly with money or high-priced goods, shouldn't be allowed to discriminate against potential employees because they have marks on their credit reports.

"A bank or other financial institution may reason that a solid financial history is a qualifying factor for an employee who has control over substantial sums of money," writes the Privacy Rights Clearinghouse. "However, the same argument cannot be made when a credit check serves only as a kind of character screening" — the only logical reason that most businesses would choose to screen their candidates for credit problems in the first place.

Few people have emerged from the recession unscathed, and the same goes for their credit reports. Job loss, medical bills and other unexpected crises have damaged otherwise strong credit histories. Suddenly, job seekers find themselves in a downward spiral: Job loss leads to bad credit. Bad credit means they can't get hired. Not getting hired causes even worse credit. And on and on the cycle continues.

Whether it's intended or not, the effect of pre-employment credit screenings is to reward the rich and penalize the poor. People without safety nets need jobs more than anyone, but they're also more likely to have poor credit histories. Their wealthy counterparts, on the other hand, can weather the recession and other financial storms with greater ease, thereby maintaining their foothold in the job market.

There's scant federal legislation to protect job applicants from this unfair process. But some states are filling in the gaps, passing bills that keep unwanted credit checks at bay. Washington, Oregon and Hawaii have all mandated that employers only review applicants' credit histories when doing so is essential to the job position. Similar legislation has been introduced two years in a row in California, but Governor Schwarzenegger has vetoed the bills each time.

It's time to take this fight into our own hands. Hundreds of Change.org members have already demanded that employers stop disqualifying job applicants based on poor credit. Will you stand with them?

Sign the petition asking President Obama and Congress to fight against credit check abuse immediately.

Photo credit: SqueakyMarmot