Imagine going through an extended period of unemployment and financial trouble, only to finally see the light at the end of the tunnel after a promising job interview. Before being hired, however, your would-be boss decides to set aside your qualifications and run your credit score. Noticing some outstanding debts in your credit history, the hirer decides to select another candidate based on this information.
It may seem like a totally bogus reason to pass someone over for a job, but nowadays it’s surprisingly commonplace for HR reps to examine credit history when evaluating candidates. Although credit scores are often pitched as some sort of indicator of a job seeker’s character, what it really does is cast another strike against economically disadvantaged Americans searching for their place in the workforce. Individuals shouldn’t be punished for doing the responsible thing by trying to gain employment to escape debt.
Thankfully, Senator Elizabeth Warren has stepped in to tackle the problem. She joins four other Democratic Senators in sponsoring the Equal Employment for All Act. The legislation would alter the content of the Fair Credit Reporting Act, thereby forbidding employers from checking a job candidate’s credit history. The bill would also explicitly prevent companies from discriminating against applicants with unimpressive credit scores.
“This act is about basic fairness,” said Warren. “Let people compete for jobs on the merits, not on whether they already have enough money to pay their bills.” The Senator also noted that many times, a bad credit score is the result of medical bills or a divorce. Prior life emergencies should not handicap a person’s subsequent job prospects.
There is some initial resistance to the Equal Employment for All Act. Credit reporting companies have worked hard to convince employers that knowing applicants’ credit histories is a good way of weeding out candidates that could potentially steal, thereby preying on executives’ beliefs that poor people are more likely to steal. However, TransUnion, one of the country’s most prominent credit reporting firms, has even admitted that it “do[es]n’t have any research to show any statistical correlation between what’s in somebody’s credit report and their job performance or their likelihood to commit fraud.”
In other words, the credit companies are just pitching this exaggerated threat to get other companies to pay for their unnecessary services. Yet it’s the debt-ridden job seekers who are allegedly prone to commit fraud!
In the grand scheme of legislation designed to help the little guy, even if passed, this reform probably amounts to a minor victory at best. Nonetheless, if Warren has room on her plate to advance this legislation, it’ll certainly be a help to some unemployed Americans who are down on their luck financially.
Since taking office this year, Warren has cemented her reputation as an economic justice warrior by being one of the most proactive members of Congress. In addition to taking on the 21st Century Glass-Steagall Act, she also successfully lobbied for reduced student loan rates.