Q & A – When should I perform a credit screen on applicants?

Q: When should I perform a credit screen on applicants?

A: Credit screens should be limited to jobs requiring cash handling or financial transaction responsibilities. This recommendation is made for several reasons.

First, the Equal Employment Opportunity Commission has said that screening out applicants based on poor credit could adversely impact women and minorities.  Where adverse impact exists, employers must justify their practices with business necessity or stop using them.

Second, federal bankruptcy law prohibits employers from discriminating against applicants who have filed for bankruptcy.

Third, state laws may prohibit employers from using credit as a pre-hire criterion at all or limit what can be used.  For example, many states do not allow employers to terminate employees for child supports orders or garnishments received.