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Chat retirement strategies with AARP’s Jean Setzfand today, Oct. 24th, at 2:00 p.m. ET

Can a Credit Screening Cost You the Job?

More employers are checking applicants' credit reports before making a hire

An increasing number of states are moving to limit the practice of credit checks to assess potential hires. Nevada, California, Colorado, Connecticut, Hawaii, Maryland, Oregon, Vermont, Washington and Illinois have passed laws — some in the last few years — to curb an employer's ability to use credit screenings.

Nevada's law, which will take effect in October, allows applicants to sue the prospective employer — and force the company to hire them — if they were denied the job because of their credit information.

On the local level, Hartford, Conn., became the first city, in 2011, to adopt a law that prohibits credit screenings on prospective employees of the city government regardless of whether the job requires handling the city's finances. New York may not be far behind. Officials are considering a measure to bar credit screenings for job applicants in government and private industry, even if the positions involve fiscal management or access to sensitive information.

Credit screenings kept Alfred Carpenter, 58, from finding work for three years. He filed for bankruptcy in 2010 due to medical bills related to a knee injury. He had no health insurance at the time because he lost his job as a clothing salesman in New York.

When he interviewed for jobs, Carpenter says prospective employers praised his résumé and experience. Then they looked into his credit history and rejected his application. He recently landed a job.

In Pinkston's case, the TSA turned him down for a job because his credit report showed that he was about $16,000 in debt. A TSA rule bars candidates with more than $7,500 in defaulted debt from being hired.

Pinkston says the debt, which had been turned over to two collection agencies, was unfounded. He obtained free legal assistance to correct his credit report but by the time it was fixed, the TSA job was filled. He was told he could apply again when another opening becomes available.

If You're In the Job Market

  • If you're turned down for a job because of negative credit information, make sure the company gives you a copy of the report, which is required by law.
  • It's never too late to improve your credit report: Two quick ways: Pay your bills on time and keep debt to a minimum.

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