Opinion
Credit Check: Employment Barrier
“Challenging People to Shape
a Better Future Now”
B ERNIE F OSTER
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The Skanner Newspaper, established
in October 1975, is a weekly publica-
tion, published each Wednesday by
IMM Publications Inc.,
415 N. Killingsworth St.,
P.O. Box 5455, Portland, OR 97228.
Telephone (503) 285-5555.
A
s Black America continues
to struggle with high
unemployment rates, a
new research report by Demos, a
public policy organization titled,
Discredited: How employment
credit checks keep qualified work-
ers out of a job, unveils how the
use of credit history in employ-
ment decisions is often leaving
people of color in the unemploy-
ment lines.
Among employers with fiduci-
ary responsibilities, it is a long-
standing practice to include credit
reviews in hiring decisions.
Banks, credit unions and similar
employers should be careful in
handling others’ money and
deposits. But the Demos report
found that employment credit
checks now are becoming stan-
dard operating procedures for
many employees without such
responsibilities. In these instances,
disproportionately screening peo-
ple of color out of jobs can lead to
discriminatory hiring.
With higher rates of unemploy-
ment and the additional burden
of wealth disparities, many
African-American and Latino
households have a greater need
to borrow for emergencies and
are also at a greater risk for fore-
closure or loan default.
Surveying nearly 1,000 low-
and middle-income households
with credit card debt, Demos
found that people of color are dis-
proportionately likely to report
worse credit than Whites. Even
for employed persons seeking a
promotion at work, credit scores
can be a factor in deciding which
employee will get the better job.
Consumers surveyed shared that
much of the debt going to collec-
tions agencies was for unexpected
R ESPONSIBLE
L ENDING
Charlene
Crowell
medical costs rather than for retail
credit card usage. Households
without health coverage were
more than twice as likely to report
that their credit score had declined
respondents.”
Amy Traub, the report’s author
and a senior policy analyst at
Demos, was even more frank.
“This practice continues because
it financially benefits the compa-
nies that market and sell this infor-
mation to employers with little
concern for the negative impact to
the economic security of those
with most at stake – low and mid-
dle-income Americans struggling
to find work in a tough job mar-
ket.”
This specific finding on medical
at work credit scores can be a factor
in deciding which employee will get
the better job.
in the past three years.
“It makes little sense to say that
someone is not a good candidate
for a job because they are still cop-
debt mirrors another by the Feder-
al Reserve Board. According to
the Fed, 52 percent of all accounts
reported by collection agencies
It makes little sense to say that someone
is not a good candidate for a job
because they are still coping with the
expense of a costly family medical
emergency several years ago
ing with the expense of a costly
family medical emergency several
years ago,” the report said. “Yet
this may be exactly the type of sit-
uation that a blemished credit his-
tory indicates: having unpaid
medical bills or medical debt is
cited as one of the leading causes
of bad credit among survey
consisted of medical debt.
These consistent findings on
medical debt are also reflected in
America’s disproportionate unem-
ployment data. The U.S. Bureau of
Labor Statistics continues to show
that Black unemployment doubles
that of Whites. From December
2012 through February 2013,
White unemployment averaged 7
percent. By contrast, Black unem-
ployment stood at 14 percent.
So what is a debt-burdened,
unemployed consumer to do?
The Fair Credit Reporting Act
(FCRA) allows employers to
request credit reports on job appli-
cants and existing employees. The
statute also lays out specific steps
under which these credit checks
must occur. By law, employers
must:
First obtain written permission
from the affected consumer
before a credit review;
Notify individuals before any
adverse action is taken as a
result of the credit review;
Offer the employee or applicant a
copy of the credit report, along
with a written summary of
his/her consumer’ rights; and
Provide job applicants with a
brief period of time to dispute
any errors in their report.
Additionally, eight states have
laws against employment discrim-
ination involving applicants’ cred-
it history: California, Connecticut,
Hawaii, Illinois, Maryland, Ore-
gon, Washington, and Vermont.
Currently three other states are
now considering similar legisla-
tion: Colorado, Massachusetts
and New York.
If your state lacks laws against
this type of discrimination, contact
your local legislator about passing
such legislation.
Charlene Crowell is a communi-
cations manager with the Center
for Responsible Lending.
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ation and West Coast Black Pub lishers
Association.
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