Credit checks should be allowed, and job applicants should have the right to explain negative information. By Knight Kiplinger, Editor Emeritus From Kiplinger's Personal Finance, March 2011 Q: Do you think it is ethical for businesses to use a job applicant's credit report and rating in the hiring process? I have a feeling that I have been hurt by this practice.This is a hot subject these days, and it's the basis for a number of lawsuits that challenge the growing practice and seek to ban any use of credit-report checks in hiring decisions. (Editor's note: Employers do not use credit scores for this purpose.) See Also: Will It Sink Your Credit Score? There are various reasons for a spotty credit record, including limited previous use of credit, which shouldn't be held against anyone. Some people get into credit trouble because of unforeseen crises, such as a severe illness with big medical bills or a lengthy layoff with no severance. Other people, whatever their income, simply live beyond their means on a regular basis, overspending on credit. To some employers, that would raise a warning flag about an applicant's possible lack of self-discipline -- and maybe even lack of integrity. And employers might reasonably be concerned that an employee's money woes could tempt him or her to steal or to pad an expense account. Advertisement Whatever the courts eventually decree in pending lawsuits, I think the most ethical outcome would be a middle ground -- allowing the continued use of credit checks in evaluating job applicants but giving applicants the right to explain negative information in their reports. (I also think that arrest records -- say, for disorderly conduct or DUIs -- may ethically be used in evaluating job applicants, with a similar right for applicants to explain the infractions.) Employers could still use a credit history as one of numerous factors in evaluating someone's fitness for a job, but no one could be rejected simply on the basis of that history. So many candidates with similar qualifications -- education, special skills and job experience -- are looking for work these days that it's understandable if employers often look for small differentiating factors (positive and negative) to help them make decisions. Credit history can be one of these.