Being jobless for many months can destroy your credit scores. Even if you manage to juggle accounts and keep paying the bills on time, using the credit cards to make up the shortfall between unemployment benefits and monthly expenses is damaging.
Worse, as too many consumers have learned, when you start using your credit cards, card issuers start lowering credit lines and raising interest rates. That's a practice that has caused many of the jobless to simply stop paying the credit card bills. Thus, their credit scores have fallen to the basement.
Most are anxious to find employment and get back on track with bill payment, but that fallen credit score gets in the way.
As of a 2004 survey by the Society for Human Resource Management, 40% of employers were checking credit before hiring. Now, with applicants flooding the job market, that number is likely higher. Many are reviewing credit histories prior to a first interview with a job candidate. Others are checking after hiring, and then terminating employees based on their credit scores.
Employers cite it as a good business practice - one that will prevent them from hiring people who are irresponsible or who make bad decisions. Some also state that the practice could cut down on employee theft. And of course, with so many applicants to choose from, using credit scores is an easy way to thin down the numbers.
Advocates for the jobless contend that checking credit scores is a form of "safe" discrimination - and that a good credit score is often completely irrelevant. Missed payments or a medical debt have no bearing on a person's skills and ability as, for instance, a plumber or an auto mechanic.
States are slowly recognizing the problem and a few are taking steps to prevent this practice. In Washington, for instance, a job candidate's credit history must be relevant to the job he or she is seeking. Lawmakers in Hawaii have approved a similar measure, but take it a step farther by allowing employers to review credit histories only after making a job offer.
Lawmakers in Ohio and Michigan are considering measures that would prohibit employers from using credit history in hiring decisions.
Federal law requires employers to get permission from potential employees before running a credit check. Further, if they decide to deny employment based on the credit report, they're required to notify the applicant. This rule is intended to give the potential employee an opportunity to explain the reason or to spot errors on the report.
------
http://www.creditscorecowboy.com is the #1 source on the planet for a
free credit report, identity theft software and a blog with a wealth of information writtten by lending professionals that know about credit and what determines ones creditworthiness.
