States Stepping Up To Limit Pre-Employment Credit Checks

If you're unemployed and suffering from bad credit, a growing number of states' lawmakers want to remove one barrier between you and a new job: a credit check.

Across the United States, legislators are working to remove employee credit checks as an obstacle to job seekers with poor credit. Based on a survey conducted in 2009 by the Alexandria, Va.-based Society for Human Resource Management (SHRM: undefined, undefined, undefined%), 60 percent of employers said they conduct credit checks on at least some prospective hires. That means if your credit report includes negative items -- such as unpaid bills, foreclosures or even high debt levels -- it could potentially prevent you from getting a job.

That may change. A significant number of elected officials nationwide believe that in a difficult economy, a poor credit history shouldn't be a determining factor for job applicants.

"This is an obnoxious practice that has been excluding a number of perfectly acceptable, perfectly qualified job applicants," says Connecticut State Rep. Matthew Lesser, a Democrat who twice introduced a bill seeking to prevent the widespread use of employee credit checks.

Lesser isn't the only lawmaker fighting to help job applicants overcome poor credit. Since 2007, three states -- Hawaii, Washington and Oregon -- have enacted legislation limiting employers' use of credit information. So far in 2010, data from the National Conference of State Legislatures show that lawmakers from 18 other states and the District of Columbia have introduced legislation that aims to limit the use of credit information in employment decisions. Additionally, an amendment to the federal Fair Credit Reporting Act was introduced to prohibit the use of most employee credit checks nationwide. "You see this black stain of bad credit tarnish a lot of communities in my state and, I suspect, in states across the county," Lesser says.

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