Bad Credit and Employment

People can expect a vicious cycle of challenges after getting laid off. First, you become one among the millions of Americans who lost their jobs in the last several months. Then, the bills keep on coming – mortgage payments, auto loan repayments, credit card bills, and medical bills. At this point, you are even more desperate and pressed to find a new job.

You set up an interview with a solid company for a great position and you are excited about the opportunity. There is one catch, at the last possible moment the employer suddenly becomes disinterested. Why? A recent credit check reveals that you have been paying your bills late the past few months. Your previous lay-off is even hurting your ability to get a job today simply because you cannot pay your bills.

Fortunately, legislators are taking notice of these occurrences. The Equal Employment for All Act is designed to prohibit a current or potential employer from using an applicant’s credit report to give or deny a person the position they applied for. There are certain exceptions to this rule. Government agencies as well as financial services firm can also ask for the applicant’s credit report to verify a person’s credit worthiness.

These exceptions shouldn’t surprise anyone. Historically, credit checks were done for government and financial jobs. But over the years, this practice has spread because employers want to know more about the applicant’s background. It is estimated that 40 percent of employers now conduct credit checks. Representative Steve Cohen noted that employees making less than $45,000 annually usually have poor credit scores related to loan delinquencies, medical problems, divorce, unemployment, or bankruptcy.

The Equal Employment for All Act would provide a certain level of protection for the most vulnerable segment in society – low-income families, recent graduates, minorities, and senior citizens. By helping them get a job, they are enabling them to take the proper steps in order to rebuild and improve their credit standing. Getting your free credit scores will help you better understand where your credit rating is.