Job Credit Check Discrimination
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Are you a minority whose job application was rejected because of your credit? If so, you may have a claim under federal civil rights laws. We are investigating complaints that Radio Shack unfairly denied employment to members of minority groups because of their credit. It is apparent that many large employers, including Wal-Mart, now routinely use credit checks as part of their employment screening process when hiring new employees, or evaluating current employees for promotions or raises. If you are a member of a minority group and you were denied a job, a promotion or a raise because of information in your credit report, please fill out the form below for a confidential, no-cost consultation by an attorney.

I saw this on one of MBM's links and it made me wonder.
Is it even legal to make someone's credit history a contingency of employment? If a person is not going to be handling money, why would credit make a difference?

quote:

Originally posted by negrospiritual:
I saw this on one of MBM's links and it made me wonder.
Is it even legal to make someone's credit history a contingency of employment? If a person is not going to be handling money, why would credit make a difference?

Is it legal? Yes, it is; provided the employer conducts the check on everyone.

Why would credit matter? It is based on an insurance industry finding that there is positive correlation between "good" credit ratings and "generally responsible behavior." [It should be noted that the insurance industry refuses to publish the study.]

I have always had a problem with this, primarily, because there are any number of factors that effect one's credit rating that have nothing to do with irresponsible behavior.

insurance industry finding? I think i remember hearing about insurance companies charging higher rates to those with poor credit. Were law suits ever filed?

Is this some sort of conspiracy to keep those with financial problems permanently on the bottom?

Found this on an allstate site



Why Does Allstate Use Credit Information to Evaluate Insurance Policies?

A Strong Connection
Over the past several years, insurance companies have increasingly included certain information from credit reports among the factors used to evaluate insurance policies. As consumers hear more about this practice, they may have questions and concerns, most of them related to the following:

What makes credit information relevant to the likelihood of insurance losses?
What kind of information from a policyholder’s credit history helps determine the premium that he or she receives?
In this document we’d like to explain how Allstate uses credit information, and why. Below are some frequently asked questions about the use of credit information by Allstate.

Why is Allstate using credit information?
Certain information from credit reports is one factor among many others that we consider to more accurately determine the risk presented by a given customer. We consider this information because of our ongoing concern about the accuracy of our risk evaluation, because it allows us to reward customers who are less likely to incur losses with lower premiums, and because it helps us make insurance more widely available.

The information we use has proved an effective predictor of insurance losses. Our actual experience confirms the connection between credit report information and the likelihood of experiencing a loss.

At Allstate, we’re finding that our use of credit information enables us not only to offer lower premiums to many customers who otherwise would pay more for their insurance, but to provide insurance coverage to more drivers and homeowners than we previously could.

Other insurance companies that consider credit information report similar experiences. A survey conducted by the National Association of Independent Insurers found insurance companies providing insurance to more people than they had been prior to using credit information. In some cases, a customer’s credit information offsets other information that previously would have prevented that customer from obtaining coverage.

I qualified for the best rate with my mortgage company. Why don’t I qualify for the best premium on my insurance? What’s the difference between the two?
The difference is that an insurance company considers only those items from credit reports that are relevant to insurance loss potential. Unlike a mortgage company, an insurance company is not assessing a customer’s credit-worthiness. The determinations made on the basis of credit report information by a mortgage company can differ from those made by an insurance company because the two companies are looking for different things when they review credit information. Information that’s important to one may not be as important to the other, or the two may consider the same piece of information in different ways.

The most important thing to keep in mind, however, is that many people who get the best rate with a mortgage company also do well on Allstate’s insurance scoring model; they would qualify for lower premiums with Allstate than they would have if Allstate did not consider credit information at all. That’s true even if the policyholder doesn’t qualify for the lowest premium based on credit information.

What kind of credit information is Allstate using?
As mentioned above, we consider only those items from credit reports that are relevant to insurance loss potential. Our model does not consider information such as income or net worth because we are not assessing our customers’ credit-worthiness.

The kind of information in credit reports that has proved relevant to calculating insurance risk includes bankruptcies, judgments, collections, and delinquencies. The number and the types of credit accounts a customer has, length of account history, are among other factors we consider.

Also, the presence in your credit report of some types of inquiries can affect your insurance premium, but it’s important to understand which types of inquiries can have an effect. Our decision will not be affected by promotional inquiries, account review inquiries, the inquiry you make yourself in order to get a copy of your credit report, or the inquiry Allstate or any other insurer makes to review your credit history for insurance purposes. Click here if you would like information on the factors considered in Allstate’s current ISM 7 scoring model.*

How is Allstate using information from credit reports?
In evaluating insurance policies, each of the several factors we consider from credit reports is assigned a “score”—some have positive scores, some negative. We then calculate an overall total, in which positive factors are allowed to offset negative ones, and make the appropriate determinations. Our method of considering all of these factors together, as a whole, ensures that no single negative item will necessarily prevent a customer from qualifying for a lower premium. And many customers, while not qualifying for the lowest premiums, will still qualify for a premium that is significantly lower than average because of the information we consider from credit reports.

What type of credit information is generally associated with the best scores?
Customers who have the best scores include those with a long-established credit history that is free of major events such as judgments and collections, and reflect either no delinquencies or only delinquencies involving smaller amounts that occurred well in the past. These customers will typically have some credit account activity, but relatively low balances compared to the available credit limits. In addition, they will have few recently opened accounts or inquiries prompted by the seeking of additional credit. While it’s difficult to identify specific actions that any particular customer could take to improve his or her insurance score, customers who manage their finances in a way that is consistent with these characteristics are more likely to have better scores.

What does credit have to do with my likelihood of having an insurance loss?
The link between credit history and loss potential has been studied extensively by many scholars outside the insurance industry, in fields such as psychology, safety engineering, occupational medicine, consumer research, and risk perception.

The two theories that emerge from the many articles and studies that we analyzed point to the added stress that financial pressures can bring and the possibility that financial difficulties may indicate a tendency toward greater risk-taking behavior—either of which can mean a higher likelihood of accidents.

These theories are persuasive, but the predictive power of this information is a matter of fact, not of theory or conjecture. Auto insurance policyholders with the least favorable scores are over 60 percent more likely to experience losses that are greater in number and severity than those with the most favorable scores. The difference is even more dramatic among property insurance policyholders. The dollar amount of losses experienced by homeowners’ policyholders with the least favorable scores is more than twice as much as for those with the most favorable scores.

How can I correct my credit report information if it’s wrong? Will my premium change?
Credit reports are generally accurate. During 2001, 2002, and 2003, we ordered over 43.5 million credit reports in connection with the use of our insurance scoring models. The number of written requests from the consumer disputing information in their credit reports totaled only 17,749; 0.041% of the total credit reports ordered for insurance scoring purposes. (And of those disputes, only a subset would have resulted in corrections to the credit report, only a subset of those would have resulted in corrections to information that affected the insurance score, and only a subset of those that affected the insurance score would have moved the insurance score to the point where premium was affected.) Most of the items commonly disputed in the credit report involved “indicative” inaccuracies (name, address, date of birth, social security numbers, previous address) that do not affect the insurance score.

But if you discover a mistake in your credit report, all you have to do is contact the reporting agency, have the credit report corrected, and call your Allstate representative to let us know that the credit report has been corrected. We will be happy to re-evaluate any decision we’ve made based on your credit information and adjust your premium accordingly.

Is Allstate’s use of credit information legal?
Yes. In all states in which we consider credit history, we are doing so in a legally permissible manner.

Do other insurance companies use credit report information?
Yes. Many personal lines insurance companies use some type of evaluation of one’s credit report for assessing risk of loss.

Does Allstate’s scoring model consider ethnicity, gender, location, or income?
No. None of the insurance scoring models we use considers ethnic group, religion, gender, marital status, nationality, age, income, or address. These are simply not factors in our insurance scoring models.

Other third parties need our permission to obtain a credit report (purchasing a car, home, credit cards, etc.). Why should the insurance companies be any different?
According to the Fair Credit Reporting Act, permission is not required if the credit report is to be used in connection with an insurance transaction. Federal law recognizes the legitimate need of insurance companies for credit information and that it would be inefficient to require permission. However, users of credit reports are required by law to provide notification whenever adverse action is taken based on information from credit reports to ensure consumer protection. It is Allstate company policy to inform new business customers upfront that we will be ordering credit reports.

The use of credit information benefits consumers
For all of the reasons outlined above, the use of credit information by insurers is becoming more common. The relevance of credit information to insurance loss potential is proven by the actual loss experience of the insurance companies using it. These same sources also demonstrate that consideration of credit information increases the accuracy of insurance risk evaluation, which allows many consumers to pay less for insurance than they otherwise would, and enables insurance companies to offer coverage to more consumers than they had in the past.


* The factors mentioned in this answer may vary from state to state based on legal or regulatory restrictions, or market conditions. If you have an Allstate policy with an insurance score, your insurance score may have been based on some or all the factors described in this answer.



Revised June 2006

if you don't pay your insurance premiums you lose coverage...

How can people with bad credit be a greater risk of loss?

I'm sure many African American members are interested in seeing justice done when it comes to all forms of job discrimination. Where can we contact you and get the forms you are referring too. Obviously, the forms are not posted here (below)

Sea Worthy (Adhakari7)

Also, many companies' job applications may have,in the smallest print to be sure, advance notice of a back ground check, which can include criminal history, school infractions (attendance, tardies, etc.), as well as timeliness of creditor payments. If you feel your situation may impact getting a job, consider the rapport established during the interview and consider whether detrimental information in any report obtained should be discussed.

It's a judgement call and could have negative as well as a non- significant impact on chances of nabbing the position. Counsel may be necessary before making a decision in order to avoid giving an impression of
dishonesty. I give this opinion as a manager and supervisor.

Bill C