According to a recent study, employer credit checks are regular and they’re preventing the unemployed from receiving employment. 1 in 4 unemployed Americans have been required to go through a credit check when applying for a job, and one in ten have been denied jobs due to information in their credit profiles.
While the general public assume credit checks are only required for senior level positions, the study found they are frequently used for entry-level, low-paying positions as well. Bad credit is often a result of unemployment and expensive health insurance, which makes it difficult for people to keep up with their everyday living expenses. Another common cause of poor credit is medical bills and student loan debt, which only makes things worse when you’re unemployed.
These factors are the sign of a poor economy and personal adversity and have a slight association with how well you perform as an employee. Other concerns have been cited as well, errors being reported to people’s credit reports, further lowering their chances for finding employment. An FTC study recently reported that one in five consumers has some type of error on an individual’s credit profile.
Additionally, employers aren’t able to view credit scores, just the information contained in a report like amounts outstanding, payment history and bankruptcies, which makes their assessment of an applicant’s creditworthiness entirely biased. In defense of many employers that use credit checks to help prevent theft and embezzlement and to avoid legal repercussions from “negligent hiring,” according to a 2012 survey by the Society for Human Resources Management. They are also used to screen applicants for positions that carry financial responsibilities.
Under existing regulations, employers aren’t allowed to run credit checks without an applicant’s permission, and they are also required to notify applicants if they decide not to hire them due to the results. The applicant is then given a window of time to start disputing any incorrect information on their credit report before the employer can take unfavorable action.
These rules are often complex to enforce, since employers can always mention other reasons for not hiring a hopeful suitor job seeker. And while more states are adding limitations for the use of credit checks by employers, companies are still allowed by federal law to reject an applicant based on information in their credit report, and they can reject any interviewee who refuses to undergo a credit check.
To prevent credit checks from unfairly excluding applicants from jobs, advocates recommended that the Consumer Financial Protection Bureau and other federal agencies require credit reporting agencies to remove medical debt from credit reports, as well as any disputed information until it is resolved. They also proposed making the process of disputing errors easier for consumers.
Let InCreditable Advisors help you protect one asset and gain another. We offer a free credit report analysis. We sit with individuals in a stress-free environment; we make recommendations to assist consumers with strategies for establishing and improving their credit profile.
For a free credit report analysis please call us today at 317.837.4969 to see how we can help improve your overall credit situation. InCreditable Advisors is Indy’s #1 Credit Consulting Company, we specialize in credit repair, debt settlement and credit education. We serve the Indianapolis, Indiana areas and the surrounding communities; Avon, Brownsburg, Danville, Plainfield and Greenwood Indiana.