The Dallas Morning News:
The recession has stripped millions of workers of jobs, putting many behind on bills and damaging their credit records.
Unfortunately, it's a bad time to have poor credit, especially if you're job-hunting. That's because employers are increasingly checking people's credit reports before hiring them.
Risk to employers
"There's no federal law that specifically prohibits employment discrimination on the basis of a bad credit report."
But credit reports can be used to discriminate in ways that are prohibited by the Equal Employment Opportunity Commission, said Audrey Mross, a partner and labor and employment lawyer at Munck Carter in Dallas.
For example, she said, the use of credit reports "can have a disparate impact on women and minorities."
David Grinberg, an EEOC spokesman, agreed, saying: "There is evidence that employer credit checks may disproportionately screen out minority job applicants and may therefore be unlawful unless needed for the employer to operate safely or efficiently."
While employer credit checks aren't unlawful per se, he said, "it seems likely that an employer will be able to justify their use only in very limited circumstances."
Mross noted that negative credit information may not account for circumstances beyond a person's control.
"What about the person - because of a terminally ill child - they've literally not paid their car note because they were paying the hospital?" she said.
Some employers may give a job applicant an opportunity to explain negative information on a credit report, she said.
"Employers recognize that with the economy that we're in now, that there are some very upstanding people who got themselves in trouble and that it's not a reflection of their trustworthiness or their honesty," Mross said.
No surprises
One way to avoid getting caught off guard by what's in your credit report is to monitor it throughout the year. You should be doing that anyway to protect yourself against identity theft and to give yourself an opportunity to correct any inaccuracies.
You're entitled to one free credit report every 12 months from each of three national credit bureaus - Experian, TransUnion and Equifax. Go to annualcreditreport.com and pull all three reports.
Job applicants also are advised to be upfront with a prospective boss about their credit reports.
"The vast majority of people, if you're upfront with them and tell them, 'There's going to be something that will give you pause, let me give you information on why it's that way and this is how I'm going to address it' - I've seen people admire that show of guts," Mross said.
You can head off those awkward moments if you're on top of what's in your credit report and correct it beforehand.
"Don't be blissfully ignorant of your credit report," Mross said. "Know where you stand."
© 2009, The Dallas Morning News, Inc