Stop Employer Credit Checks

speakout
by State Rep. Matt Lesser (D-Middletown)

Real Story Segment:

A bill coming before the Senate this week would make a real difference in people’s lives.

Imagine not getting a job you would otherwise have gotten simply because your employer finds out you have a low credit score. Strange as it sounds, nearly half of employers are now investigating job applicants’ credit histories prior.

It is tough enough in this economy to find a job. But now some people cannot get jobs because they owe money.

In some cases, this is because people were laid off, fell behind in their bills only to find that employers won’t hire them because of their debts.

In other cases, innocent people are victims of identity theft, and spend years trying to repair their credit histories, went through a messy divorce or suffered a major medical expense. Despite the fact that people now have bad credit for all kinds of reasons, three credit reporting agencies – corporations accountable to no one but their shareholders – often now decide whether you can get a job or not.

Employer credit checks are now a major barrier to employment in an already difficult job market.

In order to help get people back to work, we seek to limit the practice.

A bill I helped author, HB 5521, recently passed the House of Representatives 109-34, with bipartisan support. A conservative Republican, Rep. Selim Noujaim, even co-sponsored the bill.

HB 5521 would limit the use of credit checks to when they truly are job related or required by law.

But special interests are worried, and now the three out-of-state credit reporting agencies have hired big money lobbyists to do whatever they can to derail the bill.

Gov. Rell Threatens Veto

Unfortunately, Governor Rell’s office is threatening to veto the bill, siding with the Credit Reporting Agencies and against job seekers. This, even after Connecticut businesses said they were generally happy with the carve outs in the bill that allow truly necessary credit checks.

Please contact your state senator and ask them to support limiting the use of credit checks for employment decisions by supporting 5521.

http://www.cga.ct.gov/asp/menu/CGAFindLeg.asp

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27 responses to “Stop Employer Credit Checks

  1. Well, this bill presumably wouldn’t increase (or decrease) the number of job openings in Connecticut. Essentially, it would make it easier for people with lower credit scores to get jobs, but it would also make it harder for people with higher credit scores to get jobs (because there’d be more competition from the lower credit score people).

    A more fundamental question is, however, why shouldn’t companies be allowed to use credit scores when hiring someone? Shouldn’t companies be allowed to choose who they’re going to have work there? Might a company not think it was better to hire someone who actually honors their personal conracts and pays their bills after they purchase a product or service. I know that the credit agencies make mistakes, and that they’re difficult to deal with, but you can get errors corrected.

    I guess this could reduce the number of jobs in CT if employers decide not to hire as many people in this state versus other states because they can’t do credit checks. But I expect that would probably be a fairly small number.

  2. I suggest you skip going after the symptons and address the disease.

    Why accept the very existence of the ratings agencies? Blumie is going after them… the main problem is that our so-called leaders (such as Sen. Dodd) don’t give a hoot about the disease… probably because the task is so daunting. So instead, they completely ignore the issue.

  3. I know that the credit agencies make mistakes, and that they’re difficult to deal with, but you can get errors corrected.

    The ratings agencies are the HEART of the problem. As an example, they had Lehman rated triple-A as bankrupcy was declared. And I’m sure Lehman paid for their own rating.

    Unlike credit cards, which probably should be put eliminated… I don’t see a need to eliminate ratings agencies. But how bout this alternative… write a law which prohibits the use of their material for any decisions in CT? The job hunt thing is probably too limited.

  4. Yes, the state of Connecicut should dictatate to greedy rotten business owners how they hire, who they hire, how much they get paid and how much sick time they get.

    Ever wonder why small business is leaving this state but don’t worry, government will give everyone jobs!

  5. The ratings agencies are the HEART of the problem. As an example, they had Lehman rated triple-A as bankrupcy was declared. And I’m sure Lehman paid for their own rating.

    Lehman was rated by S&P, Fitch and Moody’s, and a few smaller ratings agencies. These agencies attempt to rate the future ability of corporations and governments to pay back loans, and assign a rating, typically from AAA or Aaa or Aa1 or something like that on down to C or D.

    Credit scores of individuals are computed by other companies: Experian, D&B and Equifax. These credit scores are a number, and these companies compute credit scores by compiling historical payment information to credit card companies, utilities, car payments, mortgages, etc. These ratings are almost exclusively backward looking: if you are late on $10,000 and win millions in the lottery, that won’t in itself increase your credit score. Rather, your credit score will go up only after you actually start paying your debts on time.

    The only thing that credit score companies and the big ratings agencies have in common is that they rate things. However, they rate different things, and have very different methodologies for doing so.

  6. This isn’t going to accomplish much of anything., except to add a burden to employers who are trying to minimize their potential liability through some sensible risk management. There appears to be an exception that would cover employers in the banking, brokerage and investment advisory fields, where knowing someone’s credit history is essential (and in some instances virtually a requirement of regulatory agencies), but it’s vague and not terribly well written.

  7. WOW, guess I should check my spelling before I hit submit!

  8. Having seen Rep. Lesser speak on CTN, I’m finding it difficult to believe he wrote this post himself, as he seems to have difficulty stringing two sentences together.

  9. SouthernWreck

    Yes, the state of Connecicut should dictatate to greedy rotten business owners how they hire, who they hire, how much they get paid and how much sick time they get.

    Ever wonder why small business is leaving this state but don’t worry, government will give everyone jobs!

    The day will come when this attitude, this narrow, grasping mindset, this grating hyperbolic- “greedy, rotten” perspective will be seen as the apex of stupidity. A 20th century relic of an idea. The Reagan mythos writ cranky and angry.

    I won’t cite the plethora of recent articles, blog posts, TV spots, etc. contrasting European quality of life with our U.S. of A. (even with higher unemployment rates -[thanks, bankers]), it’s a given – oh yes, this will bring howls from the winger-trolls – but in the end, it is about quality of life, of taking care, being taken care of, of fairness, of equality and equanimity in the striving to make it in America today – opportunity, and educated responsibility.

    The day will come, because enough individuals like Rep. Matt (ad hominem attacks withstood) are educated, experienced, and they “get” the change that will have to happen to greet a new America where ‘new, smart business’ thrives, workers have a chance to get ahead in a global economy, and the government has a balanced role in it all, light years from Euro-socialism – a new form of smart American democracy, not some besmirching of capitalism as these fearful, cowering wingers deem it.

    When that day comes, they’ll be older, crankier still, powerless, with Medicare and Medicaid, the communal American “socialist” benefit, taking care of them – an irony, to be sure.

  10. Anyone who has run credit, scored and granted credit (I ran a leasing firm ages ago) will fully comprehend why this is actually a good bill.

    The errors are simply incredible and widespread.

    A central CT fellow had a home on LI foreclosed when he was 14 and using a different name????
    Not likely – but getting it removed took him taking a day off and making a personal visit to the reporting firm where, according to him he lost it and was lucky he didn’t get arrested.
    They did however correct the problem in under an hour while he sat there fuming.

    A small business owner from Monroe with *perfect* credit going back forever *except* somehow he had made every mortgage payment for 2 years 30 days late (never on time or 60 days, exactly 30 days late).
    Uh…..that doesn’t make any sense does it?

    So help me – it wasn’t occasional at all – it was once or twice a week we would run into these idiotic and glaring reporting errors.

  11. GMR… thanks. I didn’t know that. Nonetheless, if companies are required by law to use credit ratings (for individuals or corps)… those laws should probably be eliminated.

  12. “Employer credit checks are now a major barrier to employment in an already difficult job market.”

    “In order to help get people back to work, we seek to limit the practice.”

    If the real goal of our General Assembly is to “help get people back to work” then our General Assembly would be spending their time far more productively looking for ways to “limit their practice” of making Connecticut so uncompetitive.

    In this Sunday Speak Out one thread a calls for the General Assembly to mandate sick days. This thread seeks support to help eliminate one of the metrics some employers may choose to consider when contemplating who they would like to hire into their business. Both of which are fine I guess, as long as one is satisfied to simply assume you can just keep adding mandate on top of mandate to business and expect no other than the intended impact of each individual mandate.

    Maybe next week some member of the General Assembly will ask us to support another mandate that will really deal with our “difficult job market”. Why not just mandate that any business who hires anyone in this state must also by law make a profit, no matter how many mandates they must overcome to do so. Seems simple enough to me, it’s just requires another mandate…..

  13. I agree with that flaming liberal pinko ACR.

  14. I agree with that flaming liberal pinko ACR.

    At somebody can see through my pseudo Republican veneer and realizes I can left flank everyone up to Lenin occasionally due to my Libertarian bent.

    BTW – does anyone know how to make ispell work in Firefox?
    The Firefox spell check stinks, but I’m tired of getting infected with re-directs in Explorer so I’m stuck with this firefox and am not at all impressed with it.

  15. At somebody can see through my pseudo Republican veneer and realizes I can left flank everyone up to Lenin occasionally due to my Libertarian bent.

    Spelling isn’t my only problem I guess.

    Should be:

    >At**least** somebody can see………

    I need stronger ADD meds, no question about it.

  16. The only “apex of stupidity” is chasing productive people out of this state in favor of non productive people. Soon you will be left with everyone who wants a free lunch but nobody that knows how to cook.

    The day will come when this attitude, this narrow, grasping mindset, this grating hyperbolic- “greedy, rotten” perspective will be seen as the apex of stupidity. A 20th century relic of an idea. The Reagan mythos writ cranky and angry.

  17. johningreenwich

    There appears to be an exception that would cover employers in the banking, brokerage and investment advisory fields, where knowing someone’s credit history is essential (and in some instances virtually a requirement of regulatory agencies), but it’s vague and not terribly well written.

    There is no regulatory requirement, virtual or otherwise, that banks or brokerages do credit checks. They do FBI/law enforcement checks on employees because of the employee bonding requirements.

    While I generally am against business-unfriendly laws, this one seems a good one and I support the bill. Credit reports can be a mess and since I could easily find myself out of work soon, I don’t want to have to worry about my credit score preventing me from getting another job. This is an example of information creep and all good republicans that lean liberterian should support this bill. Credit experience was set up for creditors, not employers. I guess medical records would be the next thing employers would want to see.

  18. Well as someone who owned a brokerage firm at one point in my life, I can tell you that NASD (now FINRA) examiners would ask about what kind of credit checks have been done on reps and employees as part of the pre-hire process. Whether it’s actually required or not may be beside the point; all I know is that if I am going to hire someone who may have access to other people’s money on my watch, I want to know if they have problems with debt.

  19. While I generally am against business-unfriendly laws, this one seems a good one and I support the bill. Credit reports can be a mess and since I could easily find myself out of work soon, I don’t want to have to worry about my credit score preventing me from getting another job. This is an example of information creep and all good republicans that lean liberterian should support this bill. Credit experience was set up for creditors, not employers. I guess medical records would be the next thing employers would want to see.

    If someone were truly a libertarian, at least as I understand the term, wouldn’t they say that the government shouldn’t dictate whether or not private companies could use credit scores when making their hiring decisions? Even if they personally didn’t believe credit scores were a valuable indicator or workplace success, I would imagine that a true libertarian wouldn’t believe the answer would be more government regulation.

  20. If someone were truly a libertarian, at least as I understand the term, wouldn’t they say that the government shouldn’t dictate whether or not private companies could use credit scores when making their hiring decisions? Even if they personally didn’t believe credit scores were a valuable indicator or workplace success, I would imagine that a true libertarian wouldn’t believe the answer would be more government regulation.

    So what you’re saying is that libertarians are more feudalist than anarchist?

    I have no stake in what constitutes “real” libertarianism, but the relationship between supposed libertarians and institutions is always kind of fun to pick apart. Why someone would be up on credit ratings agencies and down on labor unions is kind of hard to figure from an ideological perspective.

  21. If someone were truly a libertarian, at least as I understand the term, wouldn’t they say that the government shouldn’t dictate whether or not private companies could use credit scores when making their hiring decisions?

    In general terms I reflexively oppose almost anything gov’t does as it’s a safe bet they’ll just make a mess of it, regardless of what “it” might be.

    However, credit reporting agencies find themselves reporting a lot of glop, often due to a simple typo created data entry error.

    Those less familiar with what a mess that entire industry is, simply can’t imagine – but it’s worse than a nightmare.

    Since they refuse to police themselves or even respond in a timely fashion; it’s time to kneecap them.

    They asked for it and they have it coming.

    Why someone would be up on credit ratings agencies and down on labor unions is kind of hard to figure from an ideological perspective.

    Thank you for noting my consistency.

  22. easthartfordtaxpayer

    I have no stake in what constitutes “real” libertarianism, but the relationship between supposed libertarians and institutions is always kind of fun to pick apart. Why someone would be up on credit ratings agencies and down on labor unions is kind of hard to figure from an ideological perspective.

    I contend that the libertarian position is not anti-union or credit agency. Libertarianism is about personal freedom to choose. If a company wishes to hire based on credit scores than they ought to be able to do so. If their choice is wise they’ll recruit better employees and grow if the choice isn’t wise they’ll lose better employees to competitors who don’t use what would prove to be a flawed metric.

    Consider, what if you are the guy who doesn’t get the job because of your credit score. Sucks doesn’t it.

    What if credit score usage is illegal and you’re the guy who would have gotten the job if the first guy’s credit could have been reviewed. Sucks doesn’t it. You may think you’d fix some injustice with this law but all you’d do is change who gets hurt.

    Unions are a vital expression of the freedom of laborers. The problem with unions is not organization of labor, it’s government interference in the right of both the employer and employees to say no to each other.

    A healthy union/employer relationship requires respect for strikes AND union busting.

    Just one l’s view on what libertarianism is about.

  23. Consider, what if you are the guy who doesn’t get the job because of your credit score. Sucks doesn’t it.

    If credit scores could be taken seriously; I would agree with you.

  24. easthartfordtaxpayer
  25. What is a libertarian…

    Yeah well; I’m a registered Republican with a libertarian bent as opposed to a social conservative lean.

  26. It would seem that the author of both this thread, as well as this bill, is suggesting that some people are not able to land a job simply because they owe money:

    “It is tough enough in this economy to find a job. But now some people cannot get jobs because they owe money.”

    I guess that got me wondering; if simply owing money was a road block to landing a job then it would seem logical, most not just “some” of us could not get a job.

    How many of us who are actually working or looking for work, do not currently owe money? Isn’t the real reason that some people are having a difficult time finding a job not because they owe money, but more likely because there are far more people out there looking for work than available jobs?

    Over my working career I like many others who post here wrote job requirement specifications, interviewed, and made hiring decisions that involved hundreds of people. I, and the others involved with me in the hiring process used many different metrics to help us come to what we hoped was the correct hiring decision for each job.

    I am certain that if we thought we had found the correct person for a job, only to learn that person had a low credit score which now might put that hiring decision in question we would give that candidate the chance to explain the reason for that score. It was a very rare job candidate that perfectly met every metric set out in the interview process. It made no sense at all to just blindly writing off what could be an excellent employee without first asking a few more questions.

    While I have no real ax to grind in regard to this bill it just seems to me that with the state’s current multi billion dollar fiscal mess all our legislators in Hartford would have far more productive things to be urgently focused on if helping people get jobs were the real concern. In other words it’s time for all the members of our General Assembly worry less about how someone else is doing their job, and focus more on how well it is doing it’s job.

  27. johningreenwich

    If someone were truly a libertarian, at least as I understand the term, wouldn’t they say that the government shouldn’t dictate whether or not private companies could use credit scores when making their hiring decisions? Even if they personally didn’t believe credit scores were a valuable indicator or workplace success, I would imagine that a true libertarian wouldn’t believe the answer would be more government regulation.

    I was referring to the general libertarian view that favors privacy – I don’t want anyone in my business if they don’t need to know the information. Credit agencies were set up to help extend credit, not as some general way to judge my character. Another good way to judge my character would be to come to my house and look around to see how I decorate or if I’m tidy. It’s a slippery slope.

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