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Credit Scores and Employment

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"Credit Scores and Employment"

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Via Kevin Drum, a fascinating Slacktivist post about the growing tendency of HR departments to check the credit scores of potential employees apparently deeming this data to be an important predictor of employee behavior. This creates a Catch-22 scenario for the unemployed where you can’t improve your credit score unless you get a job and you can’t get a job until you improve your credit score.

Drum and the Slacktivist both call for making this illegal, and at first blush I’m inclined to agree. But at the same time I try to adhere to the principle I outlined here and resist the urge to call for regulating the business practices of private firms when the issue isn’t pollution or some other case where the externalities are clear. After all, it seems like either this credit check business is a sound business practice (in which case allowing it is making the economy more efficient and ultimately building a more prosperous tomorrow) or else it’s an unsound business practice (in which case competition should drive it out). But this really does seem fishy and I’m curious to read more on the subject.

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