Credit History Discrimination: A Growing Problem

In December, the New York Times ran an unsettling article about the increasing use of credit scores to vet potential romantic partners in the aftermath of the recession.

On Sunday, the paper returned to the subject with an editorial decrying credit history discrimination against job candidates. The Times called for the federal government to fight the practice, including intervention by the EEOC. As they point out, a poor credit score can be more a result of circumstances than character:

Advocates of screening say that it provides insight into an applicant’s character. But those who seek bankruptcy often do so because of unmanageable medical debt. A new study of nearly 1,000 low- and middle-income families by Demos, a research and policy group, suggests that most of those who suffered degraded credit ratings during the recession either lost their job, lacked medical insurance or incurred debt when they were injured or got sick.

Moreover, credit history discrimination has a disparate impact on black and Hispanic Americans, many of whom were targeted by predatory mortgage lenders during the housing bubble.

Checking the creditworthiness of a job candidate or employee can be compared to drug testing: the question in both cases is, when is it warranted to invade a worker’s privacy? In New York, drug testing is legal when it pertains to job function; for truck drivers, for example, safe driving is a necessary job function. Discrimination via credit-check is objectionable in any case, but especially when it is used for jobs that have nothing to do with managing money.

If you have any questions about discrimination and employment law, contact The Harman Firm today.