Research has shown that someone with a poor credit history is not automatically a poor job prospect. Nevertheless, millions of Americans who have emerged from the recession with medical debts or a record of late payments are at risk of being denied jobs by companies that use credit histories to screen applicants.
Several states have placed limits on this practice. But until the federal government engages the issue more aggressively, employers will consign otherwise qualified applicants to a kind of pariah class that gets shut out of the job market.
Many people have recovered from the recession and seen their credit ratings go up. But the proportion of people with poor ratings -- credit scores under 600 -- has grown from about 15 percent in the years before the recession to about 25 percent in 2011.
This means nearly 45 million people could theoretically be exposed to unfair credit history checks.
Advocates of screening say that it provides insight into an applicant's character. But those who seek bankruptcy often do so because of unmanageable medical debt.
A new study of nearly 1,000 low- and middle-income families by Demos, a research and policy group, suggests that most of those who suffered degraded credit ratings during the recession either lost their job, lacked medical insurance or incurred debt when they were injured or got sick.
"Poor credit," the study says, "tells a story of medical misfortune far more convincingly than one of poor work habits." The study also underscored the fact that African-American families have been disproportionately affected.
They had fewer assets to start with, and were easy targets for predatory subprime lenders who led them deeper into debt.
There are several possible steps to be taken. The Equal Employment Opportunity Commission, which has sued two companies for using screening programs that had a disparate impact on minority applicants, could seek to ban the practice outright.
The Consumer Financial Protection Bureau could require credit reporting agencies to promptly clear up old mistakes, instead of dragging out the corrections process for years, as happens now. The Federal Trade Commission should enforce a law that requires employers to notify job applicants when they are rejected for credit reasons, so they can dispute mistakes in the record.
But the real answer may be for Congress to say that except in clearly defined circumstances -- positions that require security clearance, for instance -- no worker should be turned away solely on the basis of credit history.