Skip to main content

Publication Date

October 2018


Allison Freeman, Mathieu Despard, Barbara Kiviat, Jennifer Fox, and Carly Hoffmann


W. K. Kellogg

Does the use of credit checks negatively affect lower-income job applicants, and if so, what policies and practices can mitigate this impact?


Research indicates that nearly half of employers check an applicant’s credit history when hiring. This indicator raises a number of equity and fairness issues, including the potential for disparate impacts along lines of income. Of particular concern is the effect that employment credit checks might be having on lower-income people’s economic mobility: lower-income people are more likely than higher-income people to have issues with their credit histories, and this could affect their access to jobs; yet without access to jobs, lower-income people’s financial well-being – including their credit – will only worsen. In this way, employment credit checks might create a vicious circle that inhibits lower-income people’s ability to improve their financial well-being.


To investigate the use of credit checks in employment hiring decisions, and in particular the potential effect on lower-income job applicants, the UNC Center for Community Capital (CCC) partnered with the W. K. Kellogg Foundation to undertake research into these matters.  Through interviews with key informants, employers, and state legislators, analysis of consumer complaint data from the Consumer Financial Protection Bureau, the Federal Trade Commission, and the Equal Employment Opportunity Commission, and a national scan of organizations that provide financial education, counseling, and loan products, the research determined that credit checks at hiring likely have a disparate impact on lower-income job applicants.


The authors discuss possible solutions, including employer practices, credit check restrictions, consumer protections, and credit-related programs and services.

Topics(s): Consumer Protections, Financial Inclusion