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Credit check

Chris Farrell Oct 19, 2009

Question: I am inquiring as to if the State of Missouri has enacted legislation to enable consumers to “freeze” their credit report access from landlords and employers. The state of Missouri, where I reside, currently has one of the highest unemployment rates in the nation (near 10%) and an employer that I interviewed with who otherwise would have hired me based their decision NOT to hire me on my credit report, which is a disaster. Last Sunday’s Parade magazine mentioned that the Federal government is considering legislation that would block employer access to credit reports. Please advise and thank you. Sincerely, Colleen, St Louis, MO

Answer: The official unemployment rate is close to 10%. The broadest measure of unemployment, which includes folks that want to be working full-time but are employed part-time, is at 17%. Its numbers like these that have the federal government and a number of states worried with almost half of employers making use of credit checks to screen potential employees.

That said, not much has been done on the legislative front. Washington instituted limits on employers tapping into credit histories for job candidates in 2007. Hawaii became the second state with such a law this year. A number of other state legislatures have considered comparable proposals, among them is Missouri with a 9.5% unemployment rate. The bill is here. The bill hasn’t passed into law.

All these bills recognize that a credit check is essential in some industries and jobs, such as financial services and bank tellers. There isn’t and shouldn’t be any dispute about that.

But it sure seems like an abuse of power in the current economic environment. Look, when the economy is weak employers have the upper hand. They can impose all kinds of job qualification requirements for potential openings. Sometimes, it seems as if applicants need a PhD to be a janitor and an MBA for a clerical position. Yet when the economy is booming and the unemployment rate is low these onerous requirements disappear. That’s what happened in the late ’90s.

The journalist Dana Dratch has a nice backgrounder on the issue.

Your credit score isn’t supplied to employers (at least your FICO score, which is the main one).And the fact that a potential employer may run a crdeit check is yet one more reason to monitor and correct any errors in your reports.

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