Today, (February 23, 2010) the Oregon Legislature forwarded a bill to the Governor that prohibits employers from conducting credit checks on prospective employees during the due diligence phase before making a hiring decision.

There’s a heated debate about this aspect of the screening process.

On one hand, there are a whole lot of people out on the hunt for a new job who have bad credit as a result of being laid off or being buried under medical bills. Does this mean that these obstacles should be allowed to impact their job qualifications?

Employers and businesses argue that this law interferes with personnel issues, citing that how a person handles their personal finances is a clear indicator of how a company might become at risk financially as a result of how a candidate might handle company finances… or by exercising poor judgment. Many supporters of conducting credit checks would argue that this is an example of government legislating personnel procedures, and should be left to the CEO, not a bureaucrat, to decide.

But for job seekers caught up in the economic maelstrom of the recession or at the mercy of poor health insurance, is having a credit check a barrier to renewed fiscal stability? Sometimes, extenuating circumstances causes a domino-effect to one’s finances that have absolutely no bearing on the actual ability for a person to do a job.

Being that bad credit stays on your report for seven years, this could be a complete handicap to someone who was laid off despite managing their finances in a fiscally prudent fashion prior to losing their employment.

What if there is an error on the credit report, and the individual doesn’t even have the funds to purchase the report to find out about it, let alone correct it?  That could have long-lasting impacts on a person’s earnings potential.

What do you think… how far should employers go?  Have you experienced this and been rejected by an employer because of bad credit?