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Is Your Credit Report Hurting Your Job Prospects?

It doesn’t seem fair. You are out of work, looking for a job and a regular paycheck to afford your basic living expenses. You don’t have a job, so sometimes meeting bill due dates or paying the required amount has been difficult and you were dinged on your credit report. Some employers are using those negative marks and resulting lowered credit scores to deny employment to otherwise good candidates.

There’s something wrong with what essentially appears to be employment discrimination based on your credit history. A job will give you the income to pay your bills and get back on top of your credit. But, you’re being denied a job because of your credit, which means you can’t start fixing it. It’s a Catch-22 for employees, says Amy Traub of Demos, an employee advocacy group.

The good news for workers in California is that employers are restricted to a certain extent in what information from a credit report can be used in hiring decisions. The Employment Opportunity Act prohibits employers from using consumer credit information in hiring and firing decisions if that information doesn’t apply to the actual job functions.

If an employer does use credit history information against an applicant or current employee, the California law requires that the employer tell the employee that his or her credit history was used in making a hiring or firing decision and what specific information from the credit report was relied on in making that decision.

Violating the Employment Opportunity Act may give rise to an employment lawsuit for damages against the employer. The employer can also be restrained from committing the illegal act – such as terminating an employee because of his or her credit rating.

Source: CBS News, “Bad credit ratings sinking job hunters,” February 6, 2013

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