SHRM Testifies for Allowing Credit Checks on Job Candidates

October 26, 2010 ( – The Society for Human Resource Management (SHRM) testified before the U.S. House Financial Services Subcommittee on Financial Institutions and Consumer Credit about the Equal Employment for All Act, which would prohibit the use of credit checks for most employment purposes.

In its testimony, SHRM said the use of credit background checks in employment decisions has not increased during the economic downturn, and these checks remain one tool among many that are useful to employers evaluating potential new employees. It also told the Equal Employment Opportunity Commission (EEOC) that it has significant concerns with efforts to eliminate the ability of employers to consider relevant credit information in employment.  

“We do not presume that just because an individual has slow or bad credit then she or he is automatically not qualified for any job,” Christine Walters, a human resource professional and lawyer, told the EEOC, according to SHRM. “Credit checks are intended … as just one reasonable measure toward a purpose.  In this case, choosing the most qualified candidate for a particular position.”   

In addition, SHRM said it believes that the Fair Credit Reporting Act of 1970 and the Civil Rights Act of 1964 provide employees with significant federal protections from the misuse of credit background reviews.  

SHRM contends that recent reports have given the public a misleading description of the use of credit reports. The Society has conducted a comprehensive survey that shows organizations are using credit checks in a focused and narrow way.   

The survey found: 

  • Credit checks on all job candidates are the exception — not the rule; 
  • Many organizations do not conduct credit checks at all; 
  • The use of credit background checks has not increased in the last six years; 
  • Employers generally conduct credit checks only for positions for which they are relevant, such as positions with financial responsibility or those with access to confidential information; 
  • Employers overwhelmingly use credit checks at the end of the hiring process, not to screen out applicants up front; and 
  • Employers regularly go beyond current law requirements and allow candidates to explain their credit history.