An Employers Guide to Credit Reports
Let Veriswift develop a robust background check policy that includes credit checks for your applicants.
Adding a credit check into your background check provides a glimpse into a candidate’s trustworthiness and ability to manage high levels of responsibility.
We’ll guide you through the process to ensure you get accurate and compliant screening that leads to the ideal hire.
Why Should You Check a Candidate’s Credit?
When evaluating prospective employees, we often think of reading resumes and conducting interviews. Once we’ve settled on a promising candidate, we may check on the applicant’s references and educational background.
We don’t always consider checking credit reports as part of this process. But in some cases, it is a good idea, and it’s not as hard to do as you might think.
The reason for checking a candidate’s credit report is the same reason you conduct other background screens: to protect customers and employees.
A credit report makes verifying a candidate’s identity and educational and employment background easier. This can be especially useful if a candidate leaves gaps in their employment record when filling out their resume. It can also be one of several indicators as to whether a candidate is likely to commit crimes like fraud or theft.
What Information Will You Find in a Candidate Credit Check?
While you won’t see the applicant’s actual credit score, a credit report pulls up other relevant information, such as:
● Full name and address
● Credit accounts
● Available credit
● Bankruptcies
● Liens
● Payment history
Besides a credit score, credit reports also leave out account numbers and any information, such as birth date or marital status, which could be used as a basis for discrimination.
Will Checking Credit Hurt a Candidate’s Credit Score?
There’s no need to worry that performing a credit check will damage a candidate’s credit score.
When you pull up a credit report, it will show up as a soft inquiry, much like when a candidate checks their credit history. Soft inquiries are only visible to the person conducting them and won’t be factored into the candidate’s credit score. This differs from a hard inquiry, such as when someone applies for a mortgage or a car loan.
Legal Rights of Applicants
If you want to conduct a credit check on a prospective employee, you must do so in a way that complies with the Fair Credit Reporting Act (FCRA) requirements.
You must notify the applicant in writing that you will be pulling up a credit report and obtain their written consent.
It’s also a good idea to check applicable state laws since some states have legal limitations on using credit reports in hiring decisions.
What Candidates Can Do to Prepare For a Credit Check
If you’re a job seeker with concerns about your credit report, knowledge is power.
Your best defense is to familiarize yourself with your own credit report and immediately take action if you have any negative marks. You can request one free annual credit report from each major credit reporting agency (Equifax, TransUnion, and Experian). If you find any errors, dispute them so they can be corrected. And, of course, be diligent about making payments on time.
If you’re an employer unsure whether to include credit reporting in your pre-employment screenings, reach out to Veriswift. We’ll help you develop a robust background check policy that’s just right for you.
