Md. Considers Ban on 'Bad Credit-No Job' Link

(Jan. 28) – While President Obama tackles high unemployment across the country, lawmakers in Maryland want to put a stop to what some believe keeps a lot of people from getting a job – bad credit.

"Having bad credit does not make someone a bad person," said Kirill Reznik, a Democratic member of the Maryland House of Delegates who introduced legislation last week to limit employers' use of credit reports when evaluating job applicants. "Costly medical problems, divorce and many other understandable reasons to have poor credit have nothing to do with one's ability to do a good job," he said in a statement.

Similar legislation is being sponsored in the Maryland Senate. If passed, Maryland would join only two other states – Hawaii and Washington – with such legislation. Lawmakers in California passed a similar bill last year but it was vetoed by Gov. Arnold Schwarzenegger.

Reznik believes the proposed credit history ban in Maryland is critical. While the state's unemployment situation remains better than the rest of the nation, Maryland's jobless rate rose to 7.5 percent last month as employers continued to cut jobs, according to the U.S. Department of Labor.

Vernita Humphreys, a payroll administrator, not only had bad credit but also a bankruptcy sitting on her credit report when she lost her job last year. The 59-year-old divorced mother was terminated when the construction company in Maryland where she had worked for five years relocated its payroll operations to another state. Humphreys soon received an offer from another company to work in its payroll office, contingent upon a drug test and background check.

To her dismay, the job offer was rescinded, Humphreys says, because her credit report showed she had filed for personal bankruptcy in 2002. She has no criminal record, she said, and, after 35 years of working in payroll administration for various companies, she has never been accused of pilfering or laundering money.

"I was devastated," said Humphreys. She said she offered to become bonded to ensure her trustworthiness.

Unlike Humphreys, most job-seekers seldom learn why offers don't materialize for jobs for which they seem uniquely qualified, or why there are no call-backs or follow-ups.

Reznik's office and others cite surveys done by groups such as the Society for Human Resource Management, a membership organization of personnel specialists, that indicate employers have increasingly used credit histories as part of a screening process before hiring. In 1996, only 19 percent of human resources personnel requested credit histories of potential employees, according to one survey. By 2003, the figure had nearly doubled to 35 percent and climbed to 42 percent in 2006.

But according to an unreleased survey of human resources personnel by by the organization due out next week, only 13 percent actually use background checks for job candidates, said a representative quoting from the poll. Forty percent of human resources personnel do not use any type of background check, and 47 percent use background checks only for selected job candidates or for specific positions, such as payroll.

A person's credit score is largely determined by three national credit-rating agencies: Equifax, Experian and TransUnion. The companies sell people's credit reports and credit scores to employers who want to do background checks on potential new hires or existing employees.

The practice is allowed under federal law. The law also requires that the employee give permission to do the background check and be given an opportunity to explain any adverse information in the credit report.

"These companies are the sole arbiter of your credit score, and as a result, single-handedly determine whether or not you are able to buy a car, buy a house and yes, even get a job," Reznik says.

The bill in the Maryland House and Senate is supported by several organizations, including the state's largest Hispanic advocacy group, Casa de Maryland, and state chapters of the ACLU and the NAACP.

"Minority communities tend to have lower credit scores and the impact disproportionately affects people of color when applying for jobs," said Elbridge James, president of the state NAACP.

James noted that credit checks may be further compromised by identity theft, and that young people also have less of a history of obtaining and using credit.

"They're in a terrible catch-22 in this economy," said Melissa Broome, a senior policy analyst with the Jobs Opportunity Taskforce, a nonprofit that advocates for low-wage workers. "People are losing their jobs, which is impacting their credit, and then when they go to get a job they can't because their credit is tarnished.

"We don't think people should be denied employment because they've fallen behind on their bills," said Broome, adding, "So many people are struggling with job loss now."

Vernita Humphreys counts herself lucky to have a new job – still in payroll administration, but making half her earlier salary.

Said Humphreys: "In this economy, getting behind on your bills could happen to anyone."
_____
Barbara Darko is a former television news producer and newspaper publisher.