Employers are increasingly running credit checks on job applicants and using that information to help them make their hiring decisions. A recent Society of Human Resources Management (SHRM) survey reported that approximately 60% of employers are now ordering credit reports on applicants for some or all positions. Most states, including New York, allow the use of credit reports by employers.
What is included in a credit report check?
Employers usually rely on a third-party company to provide them with a credit report check. The report will include identifying information, which includes the applicant’s name, address, previous names and addresses, and social security number. It will also include the following:
- Credit card debt
- Car payments
- Student loans
- Personal loans
- Payment history, including late payments
- Credit history, including judgments, liens, and bankruptcies
Why should employers request a credit report check?
While there can be a host of reasons for doing a credit check on a candidate before hiring, it comes down to three major purposes:
- It can protect your business against theft
A study by TransUnion, the consumer credit reporting agency, found that a job candidate with a problematic financial history was nearly twice as likely to commit theft as someone who lacked any financial history issues. And because of those concerns about rising rates of employee theft, more businesses are using credit checks for some or all positions.
- You can find out about a candidate’s level of responsibility
The information found in credit reports can offer some valuable insight into a candidate’s degree of responsibility.
What a credit check reveals about paying habits, judgments, liens, and bankruptcies is very useful in helping companies to determine not only a candidate’s level of financial responsibility but also whether a candidate would be a responsible employee in the future.
- You can protect your company from financial mismanagement
By far, the most often-listed reason for conducting credit checks comes from businesses that hire for jobs with fiduciary or financial responsibility. These positions would include openings in accounting, budgeting, banking, investments, or any job that would involve cash or sensitive credit card information. More companies are also considering the credit of candidates for senior executive positions.
Make sure you follow the law when checking an applicant’s credit
Checking the credit of your candidates is always important and sometimes essential, depending on the position for which you’re hiring. Here are the guidelines you must follow:
- You need permission: Before you conduct a credit check, notify your applicant in writing and get written authorization.
- The report can’t include old information: Typically, a credit report may not include negative information that is seven years old or older. It must not include bankruptcies that are more than ten years old.
- There are restrictions on using bankruptcy information. You may not discriminate against any applicants solely because they filed for bankruptcy.
- You must inform your applicants if you used the report against them: Also, you must give the applicant the contact information for the third-party agency that you used to get your credit report.
Do you need a Credit Report Check in Buffalo NY?
Metrodata Services Inc. is one of the leading pre-employment screening firms in Buffalo. We can do your credit report check to ensure that your company is making the best possible hiring decision. Let us help you find that perfect candidate.