Declined! How Your Bad Credit May Hurt Your Job Opportunities

March 12, 2015  |  

Bad credit is not only hurting your credit score but also your job prospects. You may not know it, but credit checks are used to discriminate against job seekers, reports The Root. And African Americans tend to be more likely to have poor credit for a variety of reasons.

But it is a vicious Catch-22 many find themselves caught in. It is impossible to improve your credit if you don’t have a job to pay your bills, and it can be difficult to land a good job if you have a bad credit rating.

“The most insidious and alarming part of the rise in credit-check use stems from its ostensibly race-neutral facade,” New America Foundation’s Hannah Emple explains. “People of color are more likely to have poor credit because of historical and contemporary forms of discrimination that limit educational, employment, borrowing and housing opportunities.”

The numbers back this theory up. According to a 2012 Demos National Survey on Credit Card Debt that analyzed low- and middle-income households, 1 out of 10 unemployed workers reported credit checks kept them out of a job. And for African Americans, the ratio is a lot higher; only a quarter of Black households report credit scores of 700 or above.

Even though this is affecting a great number of U.S. citizens, there has yet to be a major move by Congress or the White House to ban employers from discriminating against job applicants because of their credit rating.  In fact, nearly half of all employers are doing it. But politicians admit this is a problem.

“Using a job applicant’s credit history to deny employment is not fair because personal credit history is not an accurate predictor of job performance,” says Rep. Steve Cohen (D-Tenn.). Also, during the last session of Congress, Rep. Cohen, who represents Memphis, Tennessee’s largest and most predominantly Black city, garnered 30 sponsors for his Equal Employment for All Act (H.R. 645), which would stop employers from using credit checks except in cases of national security, Federal Deposit Insurance Corp. clearance, or major responsibility over employer and employee finances. But there hasn’t been much movement on this act.

Rep. Maxine Waters (D-Calif.), a ranking member on the House Financial Services Committee, is concerned as well, especially since she’s representing one of California’s largest concentrations of people of color. Rep. Waters introduced her Fair Credit Reporting Improvement Act of September 2014. The bill seeks to reduce bad credit scores from seven to four years and also to remove settled debts.

Concerned politicians have a major fight ahead. The credit bureau industry have big dollars behind them and use their lobbying power to the fullest. Experian, for example, has made nearly $3 million in combined campaign contributions and lobbying in Washington since 2013. While Equifax has spent about half that amount.

Here are some steps you can take to improve your credit score.

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