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July 30, 2009

How your credit report can keep you from getting a job

Liz Wolgemuth of U.S. News and World Report wrote an excellent article about the tragic circle one can get caught in when looking for a job with a less than stellar credit report. Here's a quote:

"This sounds like a cycle of pure misery: First, you get laid off. Then, you're one of the 4.4 million Americans who in June saw their job searches stretch out six months or more. The bills keep rolling in—car payment, house payment, medical bills—and your credit card balance is ballooning. You interview for a job and you're one of the top candidates, but a late-stage credit check has the employer going with another hire. The bottom line: You need a job to improve your financial situation, but your finances are now hurting your ability to get a job.

A House bill introduced earlier this month aims to prevent such a situation. The Equal Employment for All Act would prohibit employers from using the details of a consumer credit report in making hiring decisions, with exceptions for financial firms and government agencies, as well as jobs requiring certain security clearances. The legislation follows efforts by some states to sharply limit employers' ability to consider a person's creditworthiness in hiring.

While credit checks historically were used to screen applicants for financial and government jobs, the practice has spread. More than 40 percent of employers run credit checks on job candidates, according to some research. Rep. Steve Cohen, who introduced the bill, points to a report that a third of workers making less than $45,000 a year have poor credit scores linked to bankruptcies, loan delinquencies, divorce, medical problems, or unemployment. The bill would give 'some of our most vulnerable, 'credit challenged' citizens—students, recent college graduates, low-income families, senior citizens, and minorities—the opportunity to begin rebuilding their credit history by obtaining a job,' Cohen says."

The rest of the article can be found here -

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