We have deemed the current economic crisis "The Great Recession." Unemployment is at staggering levels, as are foreclosures and bankruptcies. As a result, credit reports are suffering.
For those of you who don’t know, your personal credit history is compiled by an oligopoly of three national credit rating agencies: Equifax, Experian, and TransUnion. These companies are the sole providers of your credit history and credit report, and as a result, single-handedly determine whether or not you are able to buy a car, buy a house, and yes, even get a job.
The reason is because they offer to sell your credit report to employers who want to do background checks on potential new hires or existing employees. The use of these reports by employers is, for a variety of reasons, going up exponentially. Research indicates that as many as 43% of employers purchase credit reports.
Currently, federal law allows this, though they do not directly allow or disallow it for the purposes of hiring and retention. Federal law also requires that the employee or interviewee must give permission to do the check and be given an opportunity to explain any adverse notations on it. Imagine this situation – you go in for an interview and are told "to get this job, we need you to give your permission for us to do a credit check. Here, sign this." Though completely voluntary, can you imagine someone not signing? And then, that same applicant has to sit before their potential future employer and explain why a divorce, medical bills, or other personal matter caused him or her to have a bad credit history, while the potential employer is making all kinds of assumptions about you and calculating health insurance premiums in their head.
Studies show that you have the same chance of picking responsible employees by choosing them at random from a stack of applications as you would using someone’s credit report as a determining factor.
Though we cannot openly ban the practice because of federal law, we can definitely restrict it, and we should. In these times of unemployment, rampant foreclosure and bankruptcy, we need to make every opportunity available to people to get jobs and get their lives back on track.
I have submitted legislation in Maryland this session to prohibit employers from using a credit score or credit report in hiring or retention, and am working with Senator Mike Lenett of Montgomery County and Senator Catherine Pugh of Baltimore to help me make the case on the Senate side.
We have received national attention on this having been featured in Time Magazine, HuffingtonPost, Inc Magazine, and one radio and newspapers throughout the Country.
But we need you to get involved. If you live in one of the 16 States currently considering a bill like mine or similar, please contact your State Legislatures.
If you live in Maryland, contact my office by going to My Website, to learn how you can help.