Bad credit can occur for a lot of reasons, but today many people have bad credit through no fault of their own. Health problem, job loss, divorce or the death of an enjoyed one can plunge a household into unexpected tough times. In difficult conditions like these, a drop in earnings or handling more debt can severely damage a credit report– even for a person who continues to make every payment on time.

For countless Americans, the fallout from the financial crisis of 2008 continuesremains to damage their credit. Consider the following:

  • Negative credit information can remain on a credit report for 7 years.
  • When house prices fell, lots of property owners were not able to refinance or sell their homes, and even today those brief sales or repossessions drag down their credit ratings.
  • When consumers cut down on spending, many little businesssmall company owners closed their shops, and with exceptional financial obligations or bankruptcy filings, they continue to handle the fallout on their credit reports.
  • When companies laid off employees, lots of were left rushing for jobs that weren’t there, and without the funds to pay their expenses, their credit reports often stay damaged to this day.

For hardworking people struggling to make ends satisfy, the only way to obtain back on their feet is to find a good job and earn an income. But even when they have the ability to offer their houses– frequently at a loss– or after they are compelled to close their business’ doors or discover temporary work, that bad credit report continues to haunt them.

And in spite of the often-desperate effort to find a job, many companies are unfairly shutting the door on applicants with less-than-stellar credit. We need to call this what it is: discrimination.

Credit reporting companies that sell Americans’ individual information to potential companies have actually pressed the story that a credit report in some way supplies insight into someone’s character. But, as even a representative from the TransUnion credit bureau confessed, they “don’t have any research study to reveal any analytical connection in between exactly what remains in somebody’s credit report and their job efficiency.” In reality, research study has shown that an individual’s credit has little to no relationship with his or her ability to succeed in the workplace. Credit reports are not a method to evaluate out bad possible workers; they are just a way to discriminate versus individuals who have fallen on difficulttough times.

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Not just are credit reports bad indications of task efficiency, however in manyin most cases they aren’t even precise. The Federal Trade Commission (FTC) reported in 2013 that as many as 1 in 5 customers could identify a minimum of one error in their credit reports. That’s compounded by the trouble in correcting errors– not only are consumers commonly unaware a mistake exists in the very first place, but credit reporting agencies can be frustratingly slow to react when it pertains to fixing those mistakes.

This suggests that in 5 job-seekers could be declined by an employer since their credit report notes a medical debt in default– even when they’ve paid off the debt in complete and on time.

This is why we presented the Equal Employment for All Act. It would assist level the playing field for hardworking households who should have a reasonable shake. Our legislation would forbid companies from requiring prospective workers to divulge their credit history as part of the task application procedure, unless the position needs a national security clearance or a credit report is needed under state or local law. It ensures that working with choices are based upon a person’s skill and experience– not on previous monetary struggles. The expense also would stop discrimination versus African Americans, Latinos and elders who are more most likelymost likely to be hit by bad credit.

This is a problem of standard fairness. Americans must have the ability to compete for tasks on their benefits, not on whether they have adequate money to pay all their costs. Much of America– hard-working, bill-paying America– has actually harmed credit. It is wrong to shut them out of the task market.

This is another way the game is rigged. A rich person who loses a job, gets separated or deals with a family health problem is not likely to obtain tangled up in financial obligation or experience bad credit. However for millions of working families, a difficult individual blow often develops into a hard monetary blow with effects that follow the family for several years.

No one ought to be rejected the chance to compete for a task because of a credit report that bears no relationship to job performance which can be filled with mistakes. Our Equal Employment for All Act would make sure all hardworking Americans have a genuine shot to get back into the labor force and back on their feet.

This story is an Op/Ed contribution to and does not necessarily represent the views of the business or its partners.

More on Credit Reports amp; Credit RatingsCredit report:

  • How Do I Dispute an Error on My Credit Report?
  • Exactly what’s a Bad Credit RatingCredit rating?
  • How Credit Impacts Your Day-to-Day Life

Images courtesy Sen. Elizabeth Warren amp; Rep. Steve Cohen