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When your bad credit keeps you from getting a job

Applicants wait to meet potential employers at a Manhattan job fair in New York City.

In the science fiction movie "Gattaca," society turns on everyone's genetics test. But here in the real world in 2014, it seems the fulcrum of all things may be your credit score. You expect the bank to look before lending you money, but what about credit checks when you go up for a new job? 

A recent study shows one in 10 job applicants have been rejected because something turned up in their credit history. And last month Senator Elizabeth Warren introduced a bill that would, among other things, bar the use of credit reports in hiring. 

“What they are they trying to do is filter, so they are using a credit score to determine if you’re someone who is a risky hire,”Carmen Wong Ulrich, a personal finance expert and host of Marketplace Money, says of the hiring practice. “But it doesn’t necessarily go together that if you have a bad credit score, that you are going to be a bad employee.”

But today, people’s credit reports are a mess for a few reasons, Carmen says.

“Long-term unemployment, foreclosures on a home, or medical debt -- which is the number one reason people declare bankruptcy -- are not going to make you a bad employee,” she says.

To hear more about how people’s credit scores can keep them unemployed, click on the audio above.

 

About the author

Carmen Wong Ulrich is the former host of Marketplace Money, APM’s weekend personal finance program.
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I was disappointed in this story as the bias of the author was readily apparent and at least one response to a question tried to conceal a counter argument. The author was asked by the host if there was any link between credit rating and employee performance, the response, please excuse me if it is not verbatim, was (in my 17 years as a finance professional, I have yet to see any evidence that extends beyond correlation and establishes causality). Causality is nearly impossible to prove while correlation can be a very strong indicator depending on the strength of the correlation. I am not a proponent of the use of this data in hiring practices, but if there is indeed correlation between credit rating and employee performance then the use of the data does have some legitimacy. I would like to see this type of bias in reporting addressed by the editors of a reputable program.

The credit system is a complete failure and obstacle, dragging the American economy down. On the macro scale, much of the problems of the last real estate crunch stemmed from attempts to correct/avoid the inaccuracies of the credit reporting system. Because they *needed* to be worked around.

On the micro scale, the inaccuracies of the credit reporting system ruin people's lives. I have a very common name, and my credit has never been usable, due to having debts attributed to to my account at random. Professionals have attempted to clear it, but in the end, the inaccuracies overwhelm their attempts. Imagine living with no ability to do ANYTHING on credit. Ever. Through no fault of my own. That's my life.

Forget Hitler; if I get a time machine, I will go back in time and shoot the person who invented the credit reporting system before he has the chance to ruin the economy over and over, along with the personal financial lives of millions.

The credit system is a complete failure and obstacle, dragging the American economy down. On the macro scale, much of the problems of the last real estate crunch stemmed from attempts to correct/avoid the inaccuracies of the credit reporting system. Because they *needed* to be worked around.

On the micro scale, the inaccuracies of the credit reporting system ruin people's lives. I have a very common name, and my credit has never been usable, due to having debts attributed to to my account at random. Professionals have attempted to clear it, but in the end, the inaccuracies overwhelm their attempts. Imagine living with no ability to do ANYTHING on credit. Ever. Through no fault of my own. That's my life.

Forget Hitler; if I get a time machine, I will go back in time and shoot the person who invented the credit reporting system before he has the chance to ruin the economy over and over, along with the personal financial lives of millions.

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