But there's an even more pernicious penalty, which was highlighted in another New York Times report, this one dated May 11, 2013. Many employers routinely conduct credit checks before hiring new employees. And, with so many applicants for each job now, some are automatically turning down people who are otherwise highly qualified, just because of personal financial issues. The Times related the story of Alfred J. Carpenter, whose job applications have been repeatedly rejected, even though his professional credentials are first class. Mr. Carpenter had lost his old job, and then been injured just as his medical insurance lapsed. As a result, his credit was decidedly shaky, although his skills and talents remained 100 percent intact.

The Times quoted consumer lawyer Chi Chi Wu, who managed to make literary allusions to both Franz Kafka and Joseph Heller in a short quote describing situations like Mr. Carpenter's. She said, "Someone loses their job, so they can't pay their bills -- and now they can't get a job because they couldn't pay their bills because they lost a job." A Kafkaesque version of Catch-22 indeed.

Fixing credit report errors

John G. Watts, the attorney first mentioned in this article, writes a blog that includes helpful advice for those who need to correct errors on their credit reports -- although you need to be aware that some of the information he provides may only apply to Alabama state law. We used this as a source for an earlier article, Five Rules For Correcting Credit Report Errors, which is well worth consulting if you ever find yourself facing this sort of issue.

How do you know if any of your reports contain errors? Well, you're legally entitled to a free copy of each of them once a year through AnnualCreditReport.com, and it's important you check at least that often. But you may be more comfortable paying for a service that allows you to monitor your reports on a continuing basis, possibly the one offered by myFICO.com.

Whatever you do, follow John Watts's lead, and fight your corner. And don't wait, as Megan Barringer did, until it's too late to insist on the correction of errors.