Thousands of people have bad credit because of layoffs and medical bills that are beyond their control and have nothing to do with their job qualifications, according to the bill's backers, mostly Democrats.

SALEM — The Oregon Legislature has sent Gov. Ted Kulongoski a bill to bar many employers from checking the credit of job seekers.

Thousands of people have bad credit because of layoffs and medical bills that are beyond their control and have nothing to do with their job qualifications, according to the bill's backers, mostly Democrats. And more than half the nation's businesses use credit histories in hiring decisions.

Opponents, mainly Republicans, say the Legislature shouldn't interfere with business personnel decisions.

The House passed the bill Monday on a 33-26 vote, largely along party lines. Earlier, the Senate passed it with a similar partisan split.

The bill has several exemptions, including banks, credit unions and law enforcement agencies. It would also exempt employers if the credit information is "substantially job-related" and the employer discloses the check to the applicant.

The bill also applies to job actions such as promotions and dismissals. The state labor commissioner would enforce it.

"It balances the needs of employers while also leveling the playing field for unemployed Oregonians who desperately want to get back to work but who may have had credit history problems that are creating walls between themselves and renewed financial stability," said Rep. Tina Kotek, D-Portland.

Credit histories are prone to errors that can't be corrected during a hiring process, she said, and even one of the big credit-reporting agencies says there is no correlation between a credit history and the likelihood that a job seeker will do good work or commit fraud.

Businesses can continue to check job, criminal and educational histories, Kotek said.

Republicans said many employers find value in credit histories, including state agencies such as the Oregon State Police, attorney general's office and lottery that use credit checks to look for indications of financial responsibility, poor judgment and risks of drug or gambling abuse.

They also said it's wrong to interfere in business personnel decisions, and the bill would reinforce Oregon's image as a bad place to do business.

"How many times do we have to kick them in the face before they leave?" said Rep. Sal Esquivel, R-Medford.

The measure is SB1045.