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Credit checks are expected for large purchases like cars and homes, but the results from our recent survey reveal that running a credit report is also a relatively common practice employers use to judge an applicants' level of responsibility, verify their employment history and identity, and assess their risk for workplace theft. In fact, more than 1 in 5 small and medium sized businesses use credit reports in the hiring process. The following chart highlights the primary reasons why businesses use credit history in the hiring process:
From the survey responses, it is very clear that the leading reason employers run credit checks is to determine if the applicant is responsible. Employers often believe that if you manage your finances responsibly and live within your means, you are more likely to be responsible and practical on the job as well. This is a double-edged sword when it comes to personal finances - you may be withheld from a job or promotion because of your credit status, preventing you from increasing your means to solve the problem. The second most prominent reason employers check an applicant's credit report is to verify their employment history and identity. Did the applicant embellish their resume? Are they really who they say they are? Both reasons received a 50% response from businesses who must take an increasing number of steps to tighten their hiring practices to ensure the candidates identity and past employment is legit. Whether the employer has been burned by false work experience on applications in the past or if they want to confirm an applicant's identity, credit checks are a seemingly common method to obtain the relevant information. When applying for a loan, a lender will run credit report to verify current and past employment - employers are doing the same. Another major reason cited for running credit checks on prospective employees is to determine if a candidate is likely to steal money from an employer. If a job candidate is currently under pressure and past due on their bills and loans, they may act irrationally and commit an uncharacteristic act like stealing money or valuables to cover their debt. With this train of thought - somebody who has had issues in the past but is currently in good standing is not that great of a risk to an employer. Also, the survey indicates that only 46% of employers who run credit reports do so for this reason and only 42% believe that a credit report is a good predictor for workplace theft. What Job Responsibilities Receive the Most Scrutiny? The survey also asked the job responsibilities that warranted a credit check. They tend to be positions that have access to cash or valuables, manage finances or supervise people and budgets. The chart below details the job responsibilities that are most likely to receive this additional check:
What You Need To Know Employers must have your written consent to run a credit report and failing to do so is a violation of the Fair Credit Reporting Act (FCRA) and would leave them legally liable. However, if you choose to deny them access to your credit report, it is very likely that you will be taken out of the running for the position. Employers cannot use a bankruptcy against someone, but that may not really matter since that person is likely to have accrued many violations on their report prior to filing for bankruptcy that can be used against them. If the employer does use bankruptcy as a means of passing you over for a job or promotion, they are legally liable and you may want to seek legal advice from an attorney. If you are denied a job based on the results of your credit report, the employer must supply you with a copy of the credit report and an explanation of your FCRA rights and you must be told which company provided the credit information and their contact numbers so that you may dispute the report's accuracy. Unfortunately, it takes time to erase and clean up your records, and by the time you make any progress, the position is likely to have been filled. Know What to Expect Your credit report is another tool in the background screening process. It is important that you are aware of what a potential employer will see if they run your credit history - but if the problems are minor or dated, they probably will not impact you negatively. Warning signs to an employer might be foreclosures, collection actions, repossessions, evictions or an enormous debt level that may make you more likely to commit an unethical action. The good news is that employers want to fill the position you are interviewing for. Your past credit infidelities may be a moot point if you have taken the necessary steps to manage your credit. - By: Jared Jost, Salary.com |
