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Bill Would Prevent Employers From Using Credit Checks in Hiring

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Too often in the United States, potential employees aren’t hired for positions because of a bad credit score. But some lawmakers are hoping to curb this practice with a new bill.

Senator Elizabeth Warren, along with six of her colleagues, introduced a bill last December that “would prevent employers from using credit checks in the hiring process, a practice that disproportionately hurts poor people,” according to Mother Jones. Warren, a Democrat who represents Massachusetts, aims to protect people from being discriminated against simply because of their credit reports.

In a poll conducted by the Society for Human Resource Management, it was found that 47 percent of employers use credit checks to determine if an applicant would be fit for a job. It’s also been shown that credit checks are unfair for minorities, low-wage employees, and women, who are frequently offered sub-prime mortgages and tend to be less financially stable than their ex-husbands following a divorce.

In an interview with Mother Jones, Warren stressed that a credit score doesn’t reveal a person’s character. It simply demonstrates that he or she has been through rough financial times. “A bad credit rating is far more often the result of unexpected medical costs, unemployment, economic downturns, or other bad breaks than it is a reflection on an individual’s character or abilities,” she said.

Along with support from colleagues like senators Sherrod Brown (D-Ohio), Jeanne Shaheen (D-New Hampshire), and Edward J. Markey (D-Massachusetts), the bill is also being backed by more than 40 different financial reform, community, and civil and labor rights groups. Three years ago, House Representative Steve Cohen (D-Tennessee) initiated legislation that was similar to Warren’s. Nine states have so far enacted laws that curtail employers’ rights to use credit checks in the hiring process.

Rather than looking at someone’s credit score, employers should be paying attention to applicants’ skills and resume, according to Warren. “Families have not fully recovered from the 2008 financial crisis, and too many Americans are still searching for jobs,” she told Mother Jones. “This is about basic fairness—let people compete on the merits, not on whether they already have enough money to pay all their bills.”

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February 4th, 2014 at 8:28 am