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Why employers conduct credit checks

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By: Kedy
on 11th May,2015

They just want to make sure that they are going to hire an employee who will be able to deliver the skills he or she provided in his or her resume.
Why employers conduct credit checks


Why is there a need for employers to conduct background checks on your credit? Employers have several reasons to do credit score checks on prospective employees. Some employers, for example, might require security clearance for people applying to certain positions that will grant access to sensitive financial information.


One of the main reasons employers conduct background or credit checks is to make sure that what is written in applicants’ resumes is true. Many applicants exaggerate their skills or add little details about themselves that aren’t true to make their resumes look good, so employers run background checks to confirm the information. They just want to make sure that they are going to hire an employee who will be able to deliver the skills he or she provided in his or her resume.


What exactly is covered when an employer does a background check? One of the things employers check is consumer credit reports. When an employer wants to check your credit report, they need to ask for your permission first, which they can attain in the form of a written letter or signed release. You may decide to refuse, but that can put you at risk of losing the job. This is usually done on applicants who are up for promotion or those who are applying for sensitive positions (such as positions that offer access to databases, SS numbers, payroll accounts, and money).


If you are wondering how credit scores affect job selection, you should know that looking at applicants’ credit information can help employers decide between two equally talented applicants. If one applicant has tax liens and debt and the other applicant has a good credit history, the employer is more likely to choose the latter because they may feel more confident that the applicant who has no financial setbacks will be able to focus more on his or her work without being distracted by financial problems.


Job seekers used to only encounter employers conducting credit checks if they were applying for a job that involved handling money. However, many employers are now starting to do credit checks more frequently as a way of protecting their companies and safeguarding the information stored in their databases. For the positions that involve handing money, credit checks are inevitable. There is nothing you can do to avoid getting your credit reports checked because having this done allows an employer to make sure that you are responsible when it comes to handling money and review your reliability when it comes to handling the company’s assets. For other positions that require credit checks, employers use the information in applicants’ credit reports to check for signs of poor decision-making or to assess his or her negligence—basically using the credit report as a character reference.


While some applicants may think that credit checks conducted by employers are unjust, credit checks are actually effective in protecting companies and their employees. Employers want to make sure that their data is going to be kept safe and confidential, and they want to hire people with integrity and honesty, which are two of the most sought-after traits in employees.


If you are a job-seeker, there is no need to fear credit checks. If you have negative items on your report, do not refuse when a potential employer asks if they can run a credit check on you. Instead, agree and be prepared to explain the reasons for your negative credit history and assure the employer that you are well on your way to financial recovery and have learned from your mistakes. If you don’t get the job due to the information in your credit report, the employer will inform you of the reason in writing.

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