When the credit-reporting agency Equifax announced in early September that a data breach had compromised the sensitive personal information of 143 million people, it showed just how vulnerable our personal financial records are to tampering and abuse. A single hack has now imperiled the Social Security numbers and credit scores of nearly half the US population.1

But the breach doesn’t merely show how vulnerable our identities are to theft. It also reveals just how central credit reports have become to our ability to find housing, to take out loans on fair terms (and avoid being targeted for predatory financial products), and even to secure employment.2

The majority of states still allow prospective employers to require that job-seekers submit to a credit check. This means that companies big and small can use your credit history to judge your qualifications as a worker based on financial circumstances that are increasingly beyond anyone’s control: A chronic health problem, unexpected layoff, or bad loan could stain your credit report and ultimately cost you a job.3

To combat the scarlet letter of bad credit, Senator Elizabeth Warren (D-MA) has introduced the Equal Employment for All Act, which would bar employers from either requesting a potential employee’s credit rating or querying that information through a credit investigation. The legislation would not only respect the privacy of job—seekers; it would also help safeguard against hidden bias in hiring.4

Even before the Equifax breach, the integrity of credit reports was murky at best. A Federal Trade Commission report found that as many as one in five consumers had a credit error from one of the top reporting agencies (Equifax, Experian, and TransUnion). But the fundamental problem isn’t data integrity—it’s economic justice. According to a survey by the think tank Demos, declining credit was associated more with misfortunes and unforeseeable crises than with a lack of financial responsibility. Suffering an unexpected bout of unemployment or a medical bankruptcy, living with a psychological disability, or being a survivor of intimate-partner abuse can all mar your credit—as can being a person of color (in surveys, whites are more than twice as likely to describe their credit as “excellent”). The factors driving a poor credit rating vary, but they too often include circumstances that should never be a pretext for judging your character or job qualifications.5

Despite the lack of evidence showing that employability can be judged by credit history, about one in seven people with poor credit recalled being “advised that they were not being hired because of their credit,” and about 10 percent of the unemployed said their credit had excluded them from a job, according to Demos’s survey research.6

Bad credit can then lead to worse credit, as people lose job opportunities and their financial resources are further eroded. And when employers can use credit reports as a proxy for eliminating the poor and people of color from an applicant pool, businesses are indirectly reproducing structural discrimination.7

There is ample evidence that banning the use of credit reports to assess potential employees can significantly improve job opportunities for both individuals and their communities. A study by Harvard researchers on the outcomes of credit-check bans revealed that they “raised employment in low—credit areas.” And the gains in hiring were skewed toward higher—paying jobs, especially in the public sector and in-home services and logistics. It’s a virtuous cycle that can help offset the downward spiral of metastasizing poor credit.8

State lawmakers are pushing back against the credit-check plague as well. So far, 11 states—including California, Connecticut, and Maryland—have implemented restrictions on the use of credit reports on job applications. But these rules are inconsistent, with several states carving out exemptions for “managerial positions” or jobs in the financial sector.9

Warren’s bill would set a broad national standard for protection, with exemptions only for positions requiring a national-security clearance. This would allow private-sector job applicants to be assessed on their overall merits, not their student-debt load. Eliminating credit discrimination will also help individuals overcome the burden of a blemished financial history and empower everyone to start with a clean slate.10