Who cares about your credit score? Just about everybody

An anemic credit score can have all kinds of nasty consequences

The year 2025 may go down as one of the most dismal to ever vex consumers trying to hang onto a perilous, paycheck-to-paycheck existence. Government layoffs and cutbacks, the government shutdown, student loan crackdowns, a weak job market and an aging population that hasn’t saved enough to maintain its lifestyle — they all contribute to weakened income prospects, which can lead to credit problems.

Two senior Democrats in Washington are reviving efforts to block employers from screening job applicants based on their credit history. Senator Elizabeth Warren of Massachusetts and Representative Steve Cohen of Tennessee have reintroduced legislation that would ban the use of credit checks in hiring.

The lawmakers argue that financial struggles should not be a barrier to employment. “Nobody should be discriminated against and miss out on a job opportunity because of their financial history,” Warren said in a statement. Cohen added that credit scores are “an inaccurate way to predict future job performance or ability.”

Bill would amend fair credit law

The proposal would amend the Fair Credit Reporting Act to forbid employers from requiring or even suggesting applicants disclose their credit history. It would also bar credit reporting agencies from providing consumer reports to employers, and prohibit hiring decisions based on such information.

Versions of the legislation have surfaced since the aftermath of the 2008–09 recession, when household debt surged. Supporters say the practice has persisted despite evidence showing no correlation between credit history and job performance.

Perhaps the most serious is the harm a poor score causes when you’re looking for work. Nearly half of employers say they consider credit scores when reviewing candidates, even though they’re not supposed to.

Disproportionate impact on minorities and women

According to Warren’s office, credit checks disproportionately disqualify people of color from job opportunities, while women are also more likely to suffer poor credit. Medical debt and periods of unemployment are the most common factors dragging down credit scores.

A 2012 survey by the think tank Demos found that one in 10 respondents reported being denied a job because of credit information. Nearly half of employers use credit reports in hiring, a 2023 Urban Institute report estimated.

Patchwork of state-level bans

Several states, including California, Colorado, Hawaii, Illinois, Nevada, Oregon and Washington, have already moved to ban or restrict the use of credit checks in employment. New York City enacted its own ban in 2015, and lawmakers are now pushing for a statewide prohibition.

Supporters of the federal bill say national action is needed to ensure fairness across industries and regions. “We should be making the job application process fairer so people can succeed with good jobs, not adding obstacles,” Cohen said.

Insurance often affected

Insurers also like to keep their beady eyes focused on your credit report. Details vary by state, but generally insurers are looking for anything that might make you more likely to file a claim.

Someone who is having trouble keeping up with bills might fall behind on home and car maintenance, making it more likely they’ll have claims in those areas, the insurance underwriters speculate. It may not be fair but that’s the thinking.

It’s a wonder anyone has insurance, what with wildfires, storms and madcap traffic all conspiring to damage homes and property and thereby making insurance companies afraid to come out and play.

Don’t underestimate credit scores

What consumers often don’t appreciate is how many essentials are affected by their credit score. Besides employment and a low-interest mortgage, insurance and other essentials can be hard to come by if your credit is poor. Here are a few other factors you may not have thought of:

Housing: Landlords commonly check credit scores when screening tenants. A low score might mean higher security deposits, needing a co-signer, or being rejected entirely.

Utility services: Electric, gas, water, cable, and phone companies often check credit to determine whether you need to pay deposits upfront. Poor credit might mean paying deposits of several hundred dollars for basic services.

Cell phone plans: Carriers use credit scores to decide if you qualify for postpaid plans or need to use more expensive prepaid services. You might also face higher deposits for phone financing.

Business opportunities: If you want to start a business, personal credit often factors into business loan applications, especially for new entrepreneurs without established business credit.

Security clearances: Government and contractor positions requiring security clearances include credit checks, as financial stress is considered a potential security risk.

Professional licenses: Some professions (like financial advisors or real estate agents) may consider credit history during licensing processes.

Dating and relationships: Some people check potential partners’ credit scores before major commitments like marriage or buying a home together.

Simply put, a poor credit score can lock you out of the middle class. It can make basic necessities more expensive and increase your borrowing costs, so that you’re paying higher interest on the very things that are more expensive because your credit rating is poor.

That’s why financial advisors recommend building good credit as the foundation of a reasonably prosperous life.

The broader impact is that credit scores can create barriers to economic mobility - poor credit makes basic necessities more expensive through deposits and higher rates, making it harder to improve your financial situation. This is why financial advisors often emphasize building and maintaining good credit as a foundational life skill.

Life’s not fair

No, it’s not. And credit scores are a big part of what make it unfair for just about everyone at some time or another. Those who call the U.S. government a deep-state operation have never thought about how enmeshed insurers are in our lives.

Maybe somebody should think about it. What do you think?