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Consumer advocates urge ban on employers’ use of credit reports in hiring
Summary
The National Consumer Law Center told lawmakers that credit reports are unreliable and disproportionately harm Black and Latino applicants; the witness urged the committee to report S1286 restricting employer use of credit information.
Chi Chi Wu, senior attorney at the National Consumer Law Center, testified in support of S 12-86, a bill that would restrict employers from considering applicants’ credit reports in hiring and employment decisions except where required by law or necessary for national-security clearances or self-regulatory financial rules.
Wu argued credit reports create a “vicious catch-22” because job loss can damage credit, and damaged credit can impede reemployment. She said there is little evidence that credit histories predict job performance, and pointed to high error rates in credit reports: she said a study found 13 percent of consumers had errors that affected their credit scores and that in Massachusetts that would translate to “over a million residents who have errors on their credit report, 663,000 who have lower scores as a result, and over a quarter million who have serious errors.”
Wu also told the committee that the use of credit histories “discriminates against Black and Latino applicants” because of historical discrimination and the racial wealth gap. She noted that 11 states and at least two cities have already restricted employer use of credit information and urged the committee to report S1286 favorably.
No committee vote occurred during the hearing.
