Congressional Bill Would Ban Pre-Employment Credit Checks

April 12, 2010 ( – A Democratic Congressman has introduced a bill that would prohibit employers from using credit checks when considering a job candidate.

U.S. Representative Steve Cohen (D-Tennessee) said his “Equal Employment for All Act” (HR 3149) would allow Americans with weak credit histories to start rebuilding their credit score by becoming employed.

“At a time when people are struggling to find jobs, credit checks should not be used as a basis to deny employment to otherwise qualified candidates,” Cohen said, in a news release. “Financial problems reflected on a negative financial report often stem from circumstances outside of an individual’s control, such as medical problems, illnesses, or layoffs. It is unfair and makes no sense to further penalize those job seekers who want to work hard but have had financial difficulties by denying employment solely on the basis of their credit.”

A congressional hearing was held on the bill earlier this year, while another is on tap for April.

The Nashville Tennessean reports that 19 states have proposed legislation to limit employers in using credit checks to screen applicants, according to a survey by the National Conference of State Legislatures. Two states, Hawaii and Washington, have laws preventing employers from using credit reports when hiring for most positions.

According to a bill summary from Cohen’s office:

  • The bill would amend the Fair Credit Reporting Act to prohibit the use of consumer credit checks in relation to current and prospective employees for the purposes of making employment decisions. Employers would also be prohibited from asking applicants to voluntarily submit to credit checks.  
  • The bill would establish exceptions for employment that requires national security or FDIC clearance; state or local governmental agencies that require a consumer report; an employee or applicant that applies for, or currently holds, a supervisory, managerial, professional, or executive position at a financial institution; or otherwise required by law.

The Fair Credit Reporting Act currently authorizes employers to obtain credit reports for employment purposes from consumer rating agencies.