4 Reasons to Restrict Credit Checks in Employment

Credit Checks Discriminate Against People of Color

The U.S. Equal Employment Opportunity Commission has expressed concern that the use of credit in the hiring process discriminates against people of color.

One study found that the average credit score for African Americans is 10% to 35% lower than the average credit score for Whites, and the average credit score for Latinos is 5% to 25% lower than that of Whites.

This disparity may increase, as foreclosures have disproportionately impacted African American and Latino communities that were targeted with high-cost loans.

Given that credit checks are often conducted for more senior positions, this practice can also deny people of color access to the higher rungs on a career ladder.

In a time of economic uncertainty and tough job competition for many Americans, employers should not be using a discriminatory hiring tool.