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DENVER—A Democratic proposal to help job-seekers with bad credit has been rejected in Colorado amid business complaints that a well-intentioned proposal to ban employer credit checks would burden employers.

A committee in the Republican House voted Monday to defeat a bill to ban credit checks on job applicants. The bill passed the Democrat-controlled Senate last month.

Supporters said today’s unemployed are facing a tougher time because they’ve often taken a hit on their credit reports and employers are using that against them.

But the opponents of the legislation said it would take control away from employers and open them up for lawsuits from disgruntled applicants.

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