Would you ever use Equifax, TransUnion or Experian as a reference on a job application? What about lesser-known credit reporting agencies like Innovis, Teletrack or Alliant Data?

I’m guessing the answer is no. You probably don’t want to involve credit reporters in your job search. 

Sadly, you may not have a choice.

Research from the Society for Human Resource Management (SHRM) shows that 60 percent of employers use credit background checks when they’re deciding who to hire, promote or even let go. Of that share, 47 percent of employers limit their credit screening to positions that require workers to handle cash, financial records and technology. But 13 percent consider credit history for all potential employees.

Predictably, the results aren’t weighed the same. If your record shows a debt-related court case pending, an account in collection, a bankruptcy declaration, a high debt-to-income ratio or a foreclosure, employers are more likely to penalize you than if you, say, have an outstanding student loan.

Now, the federal Fair Credit Reporting Act requires would-be employers to get your written permission for a third-party background check, to notify you if they plan to deny, reassign or fire you because of what they find, and confirm that they’ve taken this adverse action. But as the nonprofit Privacy Rights Clearinghouse points out, there are "two significant loopholes" in the law:

"First, if the employer does not use a third-party screening company but, rather conducts the background check itself, it is not subject to the notice and consent provisions of the FCRA. Second, the employer might tell the rejected applicant that its adverse decision was not based on the contents of the background investigation, but, rather that the job pool was so exceptional that it made its hiring decision based on the fact that there were individuals more qualified than the applicant."

This is bad, bad news for members of the last-hired, first-fired tribe, including women, the disabled, and the longtime unemployed. When credit history is a factor, people who are already struggling because they’ve lost their homes in the foreclosure racket, or have zero history with traditional creditors because of immigration status or age, or have medical debt are at a sharp disadvantage.

Race-wise, the most recent, reliable data I’ve come across suggests that Native Americans, blacks and Latinos are particularly at risk for credit-based employment decisions. (I can’t call it for API communities because, as Julianne Hing recently wrote, data about Asian-Americans and Pacific Islanders tend to be skewed toward highly educated professionals of East and South Asian descent, and mask what’s happening with other APIs.)

In its bombshell of a report "Discrediting America," the nonpartisan public policy research group Demos sums up the problem for black and Latinos:

Credit reports largely mirror racial and economic divides, with African Americans and Latinos disproportionately likely to have lower scores. In turn, these communities are more likely to be offered high-priced loan products, which may contribute to more defaults, maintaining and amplifying historical injustice.

"It’s like living in a prison without walls," says Amy Traub, a Demos senior analyst who co-authored the study. "Using credit reports this way is like taking inequity in one realm and expanding it into another. If your community is full of unsafe and unfair loan products, that can affect your job prospects. You can [easily] get caught in this cycle of bad credit."

Furthermore, credit reports are often rife with errors, says Traub. And even if yours is perfectly accurate, it isn’t a proven way to predict whether you’re right for a job. 

"Employers [use] credit reports to help them gauge whether prospective employees can handle money and show up to work on time, but there is no evidence that credit history correlates to job performance," says Traub. "What it does reveal is the kind of stress a household is under in this recession. It’s a Catch-22: You’re having trouble paying bills and you’re using a credit card for basic household expenses because you’re unemployed. But you won’t get hired because you’re having trouble paying bills."

I would love to say that you’re safe from unfair employment scrutiny if you pay your rent, car note and credit card bills on time. But as The Washington Post recently reported, we also need to watch out for so-called fourth bureau data collection agencies. These newer companies follow how you pay for a staggering variety of goods and services such as child care, cable, magazine subscriptions, cell phones and gym memberships and sell reports to employers, landlords and others. Fourth bureau data collectors also record bounced checks, payday loans, insurance claims and prescription drug purchases. 

While consumer watchdog groups have successfully pushed for greater transparency and tighter regulation of the Big Three, the fourth bureaus are off the radar, according to the Post:

Lawmakers and federal officials have crafted rules to try to help consumers understand what’s in their files. But little attention has been paid to the firms that target consumers outside the mainstream financial system. Often they are students, immigrants or low-income consumers who do not qualify for traditional loans or choose not to use them. Instead, they rely on a makeshift system of payday lenders, check cashers and prepaid cards — none of which show up in the Big Three. […]

There is no registry of fourth-bureau companies, which makes tracking down all the firms that track you nearly impossible. The businesses that submit data to fourth-bureau companies have to provide only vague disclosures — if they provide them at all.

Federal law requires lenders to notify their customers that any late or missed payments could be reported to a credit bureau, but they do not have to specify which ones or at what point in the process. The disclosures are also often tucked within what one regulator nicknamed "word barf."

The Consumers Union, the nonprofit that publishes Consumer Reports, has called for a congressional hearing about fourth bureau companies. And the EEOC, which received a record number of job bias complaints in 2010, held a hearing last fall to explore how credit history screening might be a barrier to equal employment. Given the dysfunction in D.C. and the effort to weaken the Consumer Financial Protection Bureau, I don’t see employer credit checks going anywhere soon. So take steps to protect yourself:

• If you can, pay your bills–even the seemingly small ones–on time, or early. 
• Get your credit report and dispute incorrect information as soon as possible. 
• Read up on fourth bureau data trackers here.
• If you think you’ve been the victim of employment discrimination, consider reporting it to the EEOC. 
• And follow the steps outlined at the bottom of this comprehensive fact sheet from the Privacy Rights Clearinghouse.  

I know this sounds like a lot of work–because it is. But to paraphrase vintage Mobb Deep, there’s a war going on outside no man (or woman) is safe from. Time to suit up.