If you were busy holiday shopping, you might have missed it. A new proposed law could have a big impact on the hiring process and how safe your money is. About a week before Christmas, Senator Elizabeth Warren (D-MA) and six other US senators, introduced a bill that seeks to eliminate credit checks from the hiring process. It goes even further to say that it would be unlawful to reject an applicant for a job because of bad information in the report.

Does Poor Credit Hold You Back?

They call it the Equal Employment for All Act. The bill stems from the theory that a person’s poor credit history gives no indication about their ability to perform a job well and that credit checks have kept certain groups of people including women, minorities, low-income, students and seniors, from being fairly represented in the workforce.

“Families have not fully recovered from the 2008 financial crisis, and too many Americans are still searching for jobs. This is about basic fairness — let people compete on the merits, not on whether they already have enough money to pay all their bills,” Warren said in a news release announcing the bill.

To break it down for you: the bill would make credit checks illegal in most cases except for gigs in national security.

For several one-sided (read: pro) views of the bill, check out these links:




Why It May Not Pass

There is, however, several reasons why we think this bill will stall.

You Have a Right to Know and Trust the Person Handling Your Money – We recently outlined the importance of background checks in the financial industry. This is especially crucial in the tax game. Would you trust someone to prepare and file your tax return if you knew they had thousands of dollars in delinquent accounts? It can be pretty enticing to siphon off a few dollars here and there to help you get back on top of your finances, like these two ex-cons did.  Background checks, which can include your credit report, help paint a clear picture of the person an employer is considering hiring. We know your money is important to you. It’s important that we help employers protect it for you.

Your Credit Score is Already Protected – Lisa Gerstner wrote a great piece for Kiplinger about this topic. Gerstner clarifies that an employer can’t access your credit score, but, in most states they can check your credit report. The difference is that your credit score is an actual numerical score that gives potential lenders an idea of how big of a financial risk you are whereas your credit report is a list of information about your credit cards, loans and outstanding balances, among other things. This US News and World Report article breaks down the differences between the two very well.

The Fair Credit Reporting Act and EEOC Work In Your Favor – Two of the biggest federal regulations already in existence help ensure compliance and fairness in the hiring process. This lawyer – who is kind’ve a big deal – breaks down the ways these laws protect you on his blog: http://www.theemployerhandbook.com/. Alexandria also did a bang up job explaining the role of compliance on our ActiveCare blog.

What do you think? Do you think a credit check has ever played a role in your job prospects? We’d love to hear your story. Email us at support@activescreening.com.

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