When it comes to screening candidates for a new job, many factors come into play. Whether it’s a background check or drug screening, job seekers must overcome plenty of hurdles before landing their dream job. However, a new bill may forbid employers from considering a candidate’s credit history throughout the hiring process.
The bill, known as The Equal Employment for All Act, would amend the Fair Credit Reporting Act by banning employers from conducting credit checks on potential candidates. A candidate’s financial history could only be considered by the federal government or its contracting agencies when looking to fill a job requiring national security clearance.
Backed by Senate Democrats, Senator Elizabeth Warren has decided to introduce the bill based on her belief that a candidate’s credit history serves as a poor indication of a candidate’s character. Furthermore, Warren believes that conducting credit checks results in discrimination against the poor. However, Republicans are likely to resist the bill, since they may be concerned about imposing more restrictions on businesses and removing another job tool used to screen potential candidates.
According to FICO, one of the leading providers of credit scores, Americans’ credit ratings have continued to decrease. Additionally, about 70 million Americans have credit scores below 650. Therefore, the passage of this bill would bring good news to individuals who have impressive job credentials, but low credit scores.
As a result, the bill has been backed by bi-partisan support among several Americans who share a common belief: credit checks may lead to discrimination against highly-skilled candidates. Ever since the economic downturn of 2008, less than half of all employers admitted to conducting credit checks. Additionally, although 14 percent said they considered credit checks to be highly important for making a wise hiring choice, 87 percent said that prior experience, organizational fit and skillset were the most important factors.
Nevertheless, high unemployment rates are still prevalent across the country. Many lawmakers believe that the continued use of credit reports throughout the hiring process could have a negative impact on economic growth. Additionally, supporters of the new bill are concerned about employers’ use of credit reports because they may contain inaccuracies. According to the Federal Trade Commission, nearly 21 percent of Americans said they have noticed an error on their credit report from at least one of the three top credit bureaus.
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