Enabling the Unemployed by Curtailing Employer’s Credit Checks Skip to main content

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Enabling the Unemployed by Curtailing Employer’s Credit Checks

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As all American’s attempt to make their way out of their own Great Recessions, there is an old joke about the difference between a recession and a depression that goes something like this: "A recession is when your neighbor is out of work. A depression is when you are out of work."

Well, the unemployed just got a whole new reason to feel depressed post-national recession.

Now, potential employers throughout the country are beginning to hold credit histories against already underworked and overwrought applicants. In fact, according to a recent survey by the Society for Human Resources Management, some sixty percent of employers said they run credit checks on at least some job applicants, compared with fewer than 42 percent in 2006.

While employers say these types of credit checks provide invaluable information about a job applicant's “honesty and sense of responsibility,” according to The Huffington Post, lawmakers in at least 16 states—from South Carolina to Oregon—have proposed “outlawing most credit checks, saying the practice traps people in debt because their past financial problems prevent them from finding work.”

One such anti-credit check lawmaker is Wisconsin Rep. Kim Hixson. He drafted a bill in his state shortly after hearing from constituents who have continually struggled to find work. "If somebody is trying to get a job as a truck driver or a trainer in a gym, what does your credit history have to do with your ability to do that job?" Hixson told HuffPost.

Under federal law, these same prospective employers must actually get written permission from applicants in order to run their credit check. Unfortunately, even with these protections in place, many desperate job seekers don’t feel they are in any position to refuse a potential employer’s requests.

Most of the state bills being proposed in 2010 prevent employers from using credit reports when hiring for most positions. According to The Huffington Post’s Kathleen Miller, “The laws contain exceptions in cases where such information could be relevant to the job – for example, if the person is applying to work in a bank or an accounts-payable office.”

Based on a 2008 survey by the Association of Certified Fraud Examiners (ACFE), employers and other credit check advocates argue that the two most common red flags for employees who commit workplace fraud are “living beyond their means and having difficulty meeting financial obligations.” The ACFE report also estimated that U.S. employers lost $994 billion to workplace fraud in 2008.

But in these tough financial times, many believe the economy can’t afford the credit checks.

"We are in the great recession and this creates a vicious cycle," said Maryland Delegate Kirill Reznik, who drafted a similar bill being considered in his state.  "People lose their jobs, that naturally precipitates them getting behind on bills, their credit scores go down, they are trying to find a job to pay off the bills, and employers won't hire them because of their credit score."

In the meantime, consumer advocacy groups are showing their support for legislative bans on these types of credit checks, pointing out that credit reports can also contain inaccurate information.

A qualified bankruptcy attorney can assist jobless citizens with even the worst credit histories to conquer their fears of losing it all.  Specifically, the bankruptcy attorneys at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-888-234-4181, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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