Credit Crisis: What You Need to Know Before Checking Candidates' Credit Histories
H
Unfortunate employers have paid out millions for noncompliance — don't be one of them.
iring quality employees is about collecting quality information. Before you can decide whether a candidate is right for your company, you need to know about their experience, their education, and their aspirations; you need to know about their strengths and weaknesses, their motivations, and the kind of person they are.
James Most of that information can be learned from applications, resumes, or interviews, but not all of it. Sometimes, you need the insight that comes from understanding how someone manages their own responsibilities — including their finances. That's why some employers require credit checks before hiring.
For example, someone with multiple late payments on their credit report might be too irresponsible to manage a company's financial accounts. Many government positions require credit checks because government employees are sometimes in a position to accept bribes. Employees with a significant debt burden could be more susceptible to this financial influence.
Garvey
What Credit Checks Reveal
When an employer pulls a candidate's credit report, they won't see an aggregate credit score. What they will see, however, is a list of the candidate's current and past debts, as well as records of any late payments or defaults. Like any other credit report, the credit check won't show any negHowever, the use of credit checks should never ative marks that have fallen off after 7-10 years. be taken lightly. Powerful corporations have had to pay millions of dollars in settlements because What Is the Fair Credit Reporting Act? of their noncompliance with the laws regulating employee credit checks. The Fair Credit Reporting Act (FCRA) dictates how companies, landlords, lenders, and others may If you want to include credit checks in your hiring use an individual's credit information. It protects process — and if you already do — here is what consumers from being discriminated against beyou need to know: cause of information contained within their credit reports, and it also provides guidelines on how Why Employers Conduct Credit Checks employers can request and use credit checks. A candidate's personal financial habits can reveal a lot of information about their personality that you may not have otherwise uncovered. For some employers, checking credit is another way to verify someone's responsibility and trustworthiness. For other employers, however, the behavioral patterns exposed by a candidate's credit history are more directly relevant to the role at hand. Recruiter.com Magazine
First, the company must receive permission from the candidate or employee to perform a credit check. Employers should never authorize a credit check without a signed form on which the candidate has given their direct consent, and this consent form should be separate from the consent forms for other background checks. This gives the candidate a chance to explain anything in 7
