Update 5/22/13: The original version of this post incorrectly used the term "credit score" in several places where "credit check" or "credit history" would have been more appropriate and accurate. The post has been edited to reflect that correction. Kevin Drum at Mother Jones has a piece that explains the process by which the credit reporting agencies deal with employee screening. Specifically, employers may request prospective employees' credit histories via a credit check, but these histories do not contain an actual credit score. Thank you to Greg Fisher at creditscoring.com for pointing out the error.
The use of credit checks to inform hiring decisions has been getting some much deserved scrutiny recently. Over the weekend, Charles Ellison for the Philadelphia Tribune and Gary Rivlin for the New York Times took a look at the practice of employers evaluating a job applicant's credit as part of the employment decision-making process. Ellison chronicles recent legislative efforts to curb the practice and points out that campaign finance data shows lawmakers are receiving sums of money from major credit reporting companies. Rivlin spoke with non-profit service providers and unemployed individuals who have experienced the negative effects of this phenomenon first hand.
On the surface, using credit checks as part of employment screening may seem like a simple, data-driven way for employers to ascertain a candidate's reliability. Upon closer inspection, however, using credit checks in this way is ineffective and exacerbates inequality.