If you’ve ever been denied a job because of your credit, you know how humiliating and frustrating it can be. There really is no better example of a Catch-22: “It says here that you can’t pay your bills. Sorry, we can’t pay you to work for us.”
Evidently a lot of people in Illinois have experienced this. The Employee Credit Privacy Act, which was signed into law by Illinois Governor Pat Quinn on August 10, 2010 and became effective on January 1, 2011, bans businesses from requesting credit reports and credit histories on employee applicants.
This law was drafted and passed to give post-recession job seekers in Illinois a break; many have sustained damage to their credit due to job losses and rising expenses. The law applies to even the smallest Illinois businesses.
“A job seeker’s ability to earn a decent living should not depend on how well they are weathering the greatest economic recession since the 1930s,” said Gov. Quinn at the time.
“This law will stop employers from denying a job or promotion based on information that is not an indicator of a person’s character or ability to do a job well.”
Lawmakers in Illinois have preserved several employer protections.
The law does not prevent an employer from conducting any other part of a background check, such as verifying potential employees’ Social Security numbers, reviewing criminal histories and hearing from personal references. It only applies to credit.
Financial institutions, insurance or surety businesses, debt collectors, law enforcement and government agencies are exempt from the law.
Employers are still permitted to run credit checks for jobs involving access to cash or assets of $2,500 or more, or the signatory power to transact business assets of $100 or more per transaction.
Anyone whose primary job would include the management of money, valuable or confidential company resources or trade, state or national secrets would still be eligible for a credit check.
How has this new law affected the staffing industry? So far, the impact seems to have been fairly soft.
The hiring processes of at least some staffing firms in Illinois already mirror the new law. “We haven’t seen too many adverse effects yet,” said Jennifer Furst of Furst Staffing in Rockford, IL, who has four offices in Illinois and one in Wisconsin.
“The positions we do the credit checks for are primarily related to financial services.”
Even among professional and executive-level staffing services in Illinois, credit checks did not present a major obstacle limiting the labor pool. “Not many of them did credit checks to begin with,” said a representative of Banner Personnel, a staffing firm with five offices in the Chicagoland area.
And that’s okay. The Employee Credit Privacy Act makes sense on just about every level. Today’s ”contingent workforce” is very likely to be full of “former full-time employees” with ”credit problems.”
And overcoming that Catch-22 is likely to lead to what’s known as “an economic recovery.”
“(This law is) definitely a good thing,” said a rep from Banner Personnel. ”It would be a shame to hold back a candidate just because of their credit scores.”
Compared to other states, Illinois doesn’t seem to have a major problem with bad credit. The state holds an average 684 score according to CreditReport.com. Most creditors consider 625 and below to be too low.
That got me wondering… What state has the lowest average credit score? That would be Texas with an average 651 score. What state has the highest average score? South Dakota at 710.
Where does your state rank? See the chart below.
{ 2 comments… read them below or add one }
Wow. I’ve never been faced with a credit check (at least, not that I know of) while job seeking. That is messed up.
It absolutely doesn’t make sense to me that an employer would deny someone a job because of their bad credit. IMO, wanting to be employed means the person wants to pay their bills, or at the very least, have the income for something. The law makes sense, if it’s happening; but the act itself does not. How does bad credit affect a person’s job skills? Riddle me that…
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It is sad that some companies resort to things such as credit checks – talk about hitting a person when they are down.. leaving them no hope and no options…in the US of all places. If the person shows a long stable employment history until the last 2-3 years – I think that is telling enough. The fact that anyone filling the screener role has potential access to all the applicants private data is bothersome.
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