Credit checks cause one in 10 unemployed people to be denied a job

One in four unemployed people say they've had to submit to a credit check in applying for a job, and one in 10 say they've been rejected for a job because of a credit check, according to a Demos survey of 997 low- and middle-income households with credit card debt. Talk about a vicious circle: Your credit suffers when you're unemployed, and then you can't get a job because of your poor credit report.  

The number losing out on jobs may be higher than one in 10 unemployed people, too, since employers don't necessarily let applicants know that's why they've been rejected; even though the law requires them to do so, effective oversight would be difficult.

Employers don't just use credit checks for high-level jobs that will involve control over significant amounts of money, either'Demos found credit checks required on job listings as varied as serving frozen yogurt, doing maintenance work or telephone tech support, and making deliveries. That's despite the fact that, according to the Federal Trade Commission, 21 percent of consumers have an error on at least one of their three major credit reports, with 13 percent being hit with mistakes severe enough to affect their credit scores.

Eight states'California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont, and Washington'have laws restricting the use of credit checks in hiring; while those laws tend to have significant loopholes that need to be tightened or closed, getting such laws passed in more states or in cities would help, and getting a federal law passed would be still better. Demos is also calling on the Consumer Financial Protection Bureau to push for greater accuracy from the credit reporting agencies, and to have medical debt and defaults on unsafe financial products (like very high-interest loans) excluded from credit reports, while disputed accounts should either be excluded or marked as disputed on the reports.

The fact of being unemployed already makes it harder to get a job, due to rampant, mostly legal, discrimination against unemployed jobseekers. Reliance on credit reports that often contain errors as well as information, like medical debt, that's completely irrelevant to a person's ability to do a good job, hurts unemployed people again as they search for work; one man compared it to a blacklist. Being unemployed in an economy with high unemployment shouldn't disqualify you for a job. But quite often it does.