Will Bad Credit Loans Remain An Impediment To Finding Work?

The nation’s unemployment rate remains near 10 percent, which is bad enough, but if you’re the type of consumer who can only qualify for bad credit loans, that unemployment rate may feel more 100 percent. That’s because a growing number of employers are running credit checks on potential employees. And you can bet that if your report turns up a history of missed car payments and overdue credit-card bills that you’ll struggle to beat out your fellow applicants who’ve never missed a payment in their lives. Fortunately, there is some hope for credit-challenged job hunters: A growing number of states are debating legislation that would ban employers from running credit checks on potential new workers, according to a story from the Associated Press.

New Job Qualifications Used to be, you only needed to be qualified to be considered for a particular job opening. Now, more than ever, you also need to have a good credit history. A recent survey by the Society for Human Resources Management found that 60 percent of employers now run credit checks on some job applicants. That’s up from 42 percent of companies that did the same in 2006. Critics of this practice wonder what credit history has to do with job performance. Just because an applicant’s credit is such that he or she can only take out bad credit loans doesn’t mean that this person wouldn’t make an excellent receptionist, salesperson or account executive, they say. The number of critics of this practice has grown significant enough to spur legislative rumblings in several states.

New Laws? For instance, Wisconsin State Rep. Tim Hixon has drafted a bill that would prevent Wisconsin employers from relying on credit checks when considering job applicants. Hixon told the Associated Press that the plight of a state auto mechanic who was unable to find work inspired him to draft the potential legislation. If Wisconsin legislators eventually pass Hixon’s proposal into law, the state would join other states, such as Washington and Hawaii,that already have laws on their books forbidding the practice. A similar measure is being considered in Maryland. There’s even a measure in committee in Congress, though there isn’t much momentum behind it. Of course, not everyone supports such laws. A spokesperson with the Society for Human Resources Management said that such a law would prevent employers from relying on a useful tool to separate potential job applicants. He pointed to a study showing that the majority of employers who eventually commit workplace fraud are also found to be living beyond their means and in debt, the same type of people whose credit histories relegate them to bad credit loans.

Will more states forbid employers from using credit checks? Probably. It’s easy to get the public behind such measures. Is it the right thing to do, though? How you feel about that probably depends on whether you do have to rely on bad credit loans to borrow money or whether you might have to hire someone with bad credit for a position at your company.

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