Recruiters from a St. Louis investment company recently rescinded an offer after looking at his credit history, which has been mauled by overdue card payments and an impending foreclosure on his house. He and his wife, Dana, filed for bankruptcy protection in June to try to hang on to their home.

"Of course your credit's going to look bad when you've been unemployed for months," said Denton, 60, a former fundraiser for the Crystal Cathedral in Garden Grove. "But what relevance does that have on your performance?"

The credit report is becoming the latest hurdle for unemployed workers in a dismal U.S. job market. Up to one-half of employers use credit screening to weed out potentially troublesome hires, although estimates vary, and the practice is on the rise.

Money woes could signal disorder in an individual's personal life that could translate into slipshod work habits, some staffing experts said. Companies lose billions annually to employee theft. A sterling credit history points to a worker who is more likely to be disciplined, trustworthy and reliable.

Screening employment prospects this way is legal in most of the country as long as it is disclosed to applicants, who must give permission for a credit check to be run.

But some experts said that there's no clear link between credit history and job performance and that the reports don't paint a complete picture, omitting details about divorces, medical bills or even identity theft.

However, many employers aren't willing to take chances.

Companies and organizations lose a median of 5 percent of their annual revenue - billions annually - to employee fraud, according to the Association of Certified Fraud Examiners. Asset misappropriations, including skimming from the till, pilfering equipment and the like, account for 90 percent of all cases.

The Society for Human Resource Management estimates that 40 to 50 percent of employers, including the U.S. government, run credit checks on potential hires.

Most companies pull reports produced for them by one of the major credit bureaus. Federal law permits employers to see if job prospects are paying their mortgages, credit cards and other bills on time.

But they're not allowed to see applicants' overall credit scores, and they must notify candidates if they were rejected because of their credit.

A year ago, Denton had a solid credit score above 700, according to old Experian reports. But now, for the first time, he and his spouse are out of work.

Their Menifee (Riverside County) home plunged $250,000 in value. The couple are preparing to move into a trailer and are living on less than $1,000 a month in unemployment benefits.

"You think there's no chance of being out of work more than a month," Denton said. "But as it drags on, we're just completely in the bunker."

This article appeared on page L - 4 of the San Francisco Chronicle