U.S. Senator Elizabeth Warren (D-MA) has introduced a bill that would prohibit most employers from screening job applicants’ credit histories. Senator Warren argues that the bill, which is called the Equal Employment for All Act, is necessary because too many employers refuse to hire applicants with poor credit histories even though those credit histories often have little to do with their ability to do the job. “Extensive research has shown that a family’s poor credit is more often the result of medical bills or unemployment than a mark of someone’s character or ability to perform in the workplace,” said Senator Warren.
According to Warren, “[f]ollowing the financial crisis five years ago, millions of people confronted job loss, shrinking home prices, and depreciated savings. For too many people, the fallout from the crisis also damaged their credit. Today, credit reports are not always accurate, and poor credit disproportionately targets women, minorities, and those already struggling financially.”
A study from the public policy organization Demos supports Senator Warren’s arguments. The author of the Demos study found that credit reports are often based on inaccurate information. Even when the reports are accurate, poor credit is often caused by household unemployment, lack of health insurance, and medical debt–all reasons that have little or nothing to do with whether an applicant would be a good employee.