Finance in the News & Class Assignment: Credit Reports and the Job Market

As we learned in Chapter 6, your credit report and score have a major impact on the interest rate you will pay when you borrow money.  In addition, as we learned in Chapter 10, your credit score can also impact what you pay for your auto insurance.  Are those the only areas of your financial life that are impacted by your credit report and your credit score?  The answer is no.  Your ability to get a job can also be impacted by your credit report and credit score.  This may come as a surprise to many because the 1970 Fair Credit Reporting Act imposes restrictions on an employer’s use of an applicant’s or an employee’s credit history in the employment context.  But when you’re interviewing for a job and an HR person asks you to sign a consent form that will allow them access to your credit reports, what are you going to do?

It appears that the use of credit reports as a screening mechanism for hiring may be on the way out depending on where that job interview is taking place. recently reported in an article titled “Are Employment Credit Reports an Endangered Species?” that the California legislature passed a law that places strict restrictions on the use of credit reports in the hiring practice.  There are, of course, some exceptions, for example, those applying for law enforcement jobs and those with regular access to large amounts of money are exempted from this law.

Class Discussion:

1.  Are you surprised that your credit reports might impact your ability to get a job?

2.  The Federal Trade Commission provides consumers with information on improving their credit report in an article titled, “Building a Better Credit Report.”  Read that article and come up with a single strategy that you can implement that will help you improve your credit score.  Write a short paper on your strategy.


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