David Brancaccio: One of the reasons so many people regularly proselytize for savings on this program is the effects can be far reaching and severe. And when I say spending, it's not just spending on the espresso machine upgrade or a Nikon D3X, the spending can be for even more defensible reasons.
Like an advanced degree -- which seems like a worthy investment. That is until the new master's degree in international relations ends up battering your credit rating, and job prospects. Listen to the story of a 38-year-old woman, denied a job, because of what spending on education did to her credit report.
Saran Sholar: My name is Saran Sholar. I am from Chicago, born and raised on the South Side. I decided to go back to school to get a better education to make myself more marketable.
...After a successful career in human resources. The irony of this will become clear in a minute. So, Sholar finishes her master's program, connects with her old network of contacts and plunges back into the job market in 2008. Uh huh. 2008, that ghastly job market.
But then, in 2009, she gets a call from a recruiter about a job in human resources, her field. She applies; does an interview.
Sholar: And I never heard from them. So I called back. And the recruiter told me that she had taken a look at my background, doing a credit check. And my credit was an issue and they could not hire me.
The problem was the student loans. With no job, she couldn't pay. She called the loan company, and they said you gotta give something.
Sholar: But there was nothing to give. And they asked me if I could borrow it. My mother is on a fixed income; she's retired. My sister has been laid off. And my brother wasn't working. I was the primary money-giver in the family.
Still she kept trying for jobs.
Sholar: I was looking to just make some money -- whether that was I was your virtual secretary or, heck, if I was your barista. It didn't matter at that point but I could not find work. It's a catch-22. I can't pay my student loans because I don't have a job. I can't get a job because I can't pay my student loans.
It's no fluke, Saran Sholar's experience. A new study finds six out of 10 employers use credit reports to vet job applicants. Amy Traub is with the public policy think tank Demos.
Amy Traub: I found this very surprising. And I immediately wondered, on what basis is a credit report being sought here? And I found that it's really not on any basis. There's no evidence that the credit report will tell a prospective employer anything.
Traub says crummy credit can have as much to do with the state of the economy as it does with the spending choices we make.
Traub: What happens when you are out of work like that for months on end? People run through their savings, they start to have difficulties paying bills on time. And finally, you have another job in sight -- the end of this long period of unemployment is finally at an end -- and then Americans are denied employment. And that's just unfair and really it's unproductive for the economy as a whole.
Several human resources experts we spoke with said they discourage companies from using credit screening, except where the job is especially sensitive -- a position in banking, for instance.
Recruiting consultant Jerry Thurber of Tandem Select in Colorado says even then a person's credit should only be used to prompt more research on an applicant if there are red flags. Several states have cracked down on credit reports used in hiring. But Thurber says he hopes regulation does not go overboard.
Jerry Thurber: Some states have done sort of blanket statements saying, "You may not use credit history as part of the background screen." And I think they're missing the boat there. Because clearly it is one data element among seven or eight data elements that help an employer make an intelligent hiring decision.
Federal legislation to limit credit checks in hiring keeps getting introduced into Congress where, to date, it has gone nowhere fast. You should know you already have the right under federal law to be told if your credit report is the reason you're not getting the job.
And what about Saran in Chicago, who chose to spend down her savings and take loans for a master's that she hoped would make her a stronger job candidate? This week, a company has tossed her a bit of human resources consulting work, a couple of days' worth.
Sholar: It's more likely one and a half days now but I have to say they really are trying. Have they run my credit? No, because I'm a contractor so they didn't have to.