Most people know that when applying for an apartment or job they may go through a credit check, but did you know that it is not legal to process soft inquiries in all states? In some cases, soft inquiries performed by employers are actually illegal, and despite only 13% of hiring managers admitting to performing soft inquiries for employment purposes in 2012, that is still a significant number.
However, in 2014, 39 newly introduced bills in 19 states resulted in 11 states preventing soft inquiries by introducing new employer restrictions.
Employer credit checks encourage economic discrimination
The push to restrict third-party credit access when it comes to employment and residential services isn’t new, and that is because in most cases persons with good credit have steady cash flow, meaning that individuals with financial problems are effectively being ‘punished’ for having bad credit caused by low income, and are being denied the option of improving credit or circumstance.
In other words, if employers can discriminate against potential employees based solely on the fact that they may have had bad credit in the past, they can be prevented from ever improving credit.
What does it mean to live in a no-credit state?
Although soft inquiries are still permitted for law enforcement officers and in select financial sectors, all other employers in restricted states will face penalization if they perform unlawful soft inquiries.
Currently, states which no longer permit soft inquiries for employment are California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington.
This means that employees in these states (regardless of if they do or do not have existing financial problems) do not have to consent to a credit check, and if they are asked during their application process to sign a consent form, they are actually being asked to waive their legal rights.
Do employment checks stay on your credit score?
Unlike hard inquiries that you would remove with the help of Inquiry Busters, soft inquiries won’t stay on record – but, that doesn’t mean you should consent to a credit check you don’t want.