John Oliver Breaks Down Why Credit Reports Shouldn't Be Trusted

John Oliver
Nearly half of employers require a credit check from potential hires. There are more reasons than you think for why they shouldn't. YouTube

Credit reports seem trustworthy, right? "Credit" and "report" are both very official-sounding words, after all. Combine them together, and you get something that nearly half of employers use to help determine which prospective employees to hire, as John Oliver pointed out on Sunday's episode of Last Week Tonight. As you may have guessed by now, this may not be such a good idea.

There are three major credit reporting firms: Equifax, Experian and TransUnion. It is in the best interest of these companies to promote credit reports as a way to determine how responsible a job candidate is with money. They will admit there is no statistical research that shows a correlation between a good credit score and good job performance, because there probably isn't. As Oliver put it, "A good credit score could mean you're unlikely to commit fraud, but it could also mean you're so fucking amazing at it that you've never been caught."

But there are other reasons credit reports are unreliable. For one, as a 2014 study from the Consumer Financial Protection Bureau found, 52 percent of debt on credit reports comes from medical expenses. Second, and most importantly, credit reports aren't really very accurate. According to a 2013 government study, 25 percent of credit reports contain errors, and one in 20 contains errors so significant that they affect the consumer's ability to land apartments, loans or mortgages.

These errors often consist of confusing two people. Oliver highlights a number of people whose credit reports and background checks erroneously listed them as debt-heavy Utahns, sex offenders and even terrorists. And rectifying those mistakes is difficult. It took one woman, who told her story on 60 Minutes, six years to prove she wasn't the person her credit report claimed she was, and even after that time, her report still wasn't accurate.

Because of the complaints that continue to roll in, in 2015 the big three firms promised in court to improve how they resolved disputes. This isn't likely to change anything, though. The industry, as Oliver pointed out, is "uncomfortably complacent." Reports of faulty credit reports have headlined the news for decades. Oliver even showed clips of anchors reporting essentially the exact same news in 2008, 2004, 2002, 1998 and 1991. In other words, nothing is changing.