U.S. states consider ban on pre-employment credit checks

Practice traps people in debt, prevents them from working: Legislators

Legislators in at least 16 states across the United States have proposed banning most credit checks because the practice prevents many people with past financial problems from finding work, effectively trapping them in debt.

The proportion of employers running credit checks on at least some applicants has increased in the past few years, according to surveys from the Society for Human Resources Management. The association found 60 per cent of employers run credit checks, up from 42 per cent in 2006.

Employers say credit checks give them valuable information about how an applicant will handle responsibility and his predisposition to theft or fraud.

Employers must get written permission from applicants to run a check on them, but consumer advocates say many job applicants don't feel like they have a choice.

Hawaii and Washington already have laws in place that prevent employers from using credit reports when hiring for most positions but contain exceptions for jobs where the information could be relevant — such as positions in a bank or an accounts payable office.

Most of the bills now before state legislatures are very similar to the laws in Hawaii and Washington. There is also a similar bill before Congress, which would change the federal laws, but it has been in committee since last summer.

Last year California Gov. Arnold Schwarzenegger, under pressure from chamber of commerce leaders, vetoed a bill that would have curbed the use of credit checks in the state.

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