States Seek to Restrict Employer Credit Checks

Lawmakers want employers to prove credit reports are necessary
By Clay Dillow,  Newser Staff
Posted Feb 13, 2009 12:00 PM CST
In this Jan. 20, 2009 file photo, bank repo, foreclosure and for sale signs sit outside a foreclosed home in Houston.   (AP Photo/David J. Phillip, File)
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(Newser) – Several states and Obama administration officials are seeking restrictions on employers that unfairly screen out job applicants using credit checks, USA Today reports. Spiking unemployment and mortgage foreclosures brought on by the financial crisis have hurt many, and lawmakers say trustworthy people are being shut out of good jobs. Some 43% of US employers check applicants for overdue payments, up from 36% in 2004.

"There's an awareness that a lot of people have bad credit for reasons that have nothing to do with their worth as an employee," one Connecticut state representative said. Employer credit checks are legal, but can be discriminatory if they are not essential to the hiring decision, and critics are pushing for bills that require employers to prove the checks necessary.