Crowdsourcing Solutions

Credit Reports, Scores, History and Rating: Employer Check


Plenty of companies around the world nowadays are keen on checking your credit report, history and ratings before they can finally say yes to you. Although it could be a cause of nuisance to some people, we must say the companies have a valid reason for doing so.

Doing a thorough background check is essential so that they can know how your financial accounts have been doing all this while and whether the salary they will pay you is good enough for you or not. Read more about credit reports, scores, history and rating in this post!

employer checklist for employees

Why do Employers Check Credit Reports?

The following mentioned are few reasons that explains the importance of credit and background check of employees.

1. What should you know about credit report checks?

Employers are nowadays constantly running credit report checks on those who are applying for the first time to their company. They are using this information for making better hiring decisions.

According to several important surveys conducted in the past, around 60% of these employers will check your credit reports before you can actually get through the interview process.

2. What falls under a credit report check?

An employment credit report will include getting information which consists of name, addresses, social security number and lots more. It will also show you the debt which has occurred including the credit card debt, car payments, mortgage and student loans, late payments and history of your payment has also been added to this. All of this is thoroughly checked before employees can get the job.

3. Employers should always ask for permission:

Did you know that employers should actually get your permission before they can check your credit history? According to the Fair Credit Reporting act, it is essential to notify the person in brief writing and get hold of the authorization as soon as possible. In case the employer is conducting inquiries, it is important for them to check whether you are okay with it.

4. Laws which restrict the credit checks:

Till date, most of the employment based credit checks happen to be legal and fall under the federal law. The acts stated that employers who check the credit reports must first get permission from the employees.

Employers are requested to forward a copy of their report along with the summary to the applicant and then have to wait for a couple of days before they can explain the rebuttal or even explanation regarding findings. There are a few states which will also restrict the credit checks.

Why do Employers Check Credit Scores?

There are several reasons why an employer wants to check your credit scores or even your credit for that matter. For example, The government security has been expected to have employment background check for the job you happen to be interviewing.

For the positions which involve financial as well as accounting responsibilities, credit reports can actually give them a good idea on how dependable you are financially. Not only that, this is their opportunity to verify your credit scores entirely and see how well off you are in terms of money. It could be an eye opener for some.

Why do Employers Check Credit History?

In this section, you will learn about credit history, what your employees are allowed and not allowed to see and what must you know about credit history and reports!

1. Why do employers find it important to check your credit history?

According to a study conducted in 2012 by the Society for Human Resource Management, around 47 of companies from the United states had conducted a few background checks on the credit history.

Companies have said that they don’t always do this to reduce any kind of heft, perhaps imagining that people who are way behind in terms of large debt could be more inclined towards stealing from the company itself and reduce the liability for hiring.

Professionals in the states such as Lynda Spiegel have stated that employees who have access to your financial accounts and have details of them will probably have to get most of their credits checked regularly. This could also include cashier positions that are low level along with accounting jobs of the corporate level.

If your work needs any kind of national security clearance or has any confidential information will need a check too.

2. What are they allowed and what they aren’t allowed to see?

The credit report that most of these employees get, happens to be different from the report and credit banks. Other lenders can in that way see when you can apply for a better credit line. This version of employees does not list the age, birth and there is no need because an employer doesn’t have to know about it. The reporter will also not enlist the account details although the credits and sources will be shown.

3. What should you know about credit reports?

Credit reports are considered to be a part of some background check process with some education, criminal background check, license checks as well as certification. There are also a few third party companies which will do background checks on behalf of the employees or even the company could buy some report directly from the credit beau itself. In a few cases, the employer could ask you to go further and get a better copy of the report and share with them too.

4. A myth that must be squashed:

One myth that has been broken is that most employers can actually get a check on your own credit score. However, this is not entirely true. The report that the company gets doesn’t need to have your credit score written on it.

The inquiry that you do on credit files must never affect your credit scores. By law, the employer should also get some written permission before you can check the credit score as well.

Why do Employers Check Credit Rating?

There are three reasons why so many employers do a credit rating check nowadays. Keep reading to find out!

1. To see whether you are being honest:

The first reason why employers nowadays do credit rating checks so that they know whether you are saying the truth or not! It has been estimated that around 40% of the resumes contain information that is false and tweaked. Therefore employers before hiring would like to be sure of what they are doing.

They want an employee who is honest and is getting paid a fair amount. Once they have been hired, an employer could also tout some of the qualifications if it has been revealed that the qualifications are not true.

2. Check whether you are graduated:

A second reason to check credit rating is to make sure whether you have done a proper college education degree or not. They want to confirm whether you are being honest about where you have worked in the past. They would also like to check with the other companies that you have worked with and if the job application has all the correct information or not.

3. To protect you:

These checks may also be used for protecting you in the future from any liability issues- in case the performance is bad or even when employers have been held responsible for any kind of negligence etc.

Also if some bus company hires a person who comes with a poor record of driving, they could be held responsible in case the driver gets involved in a crash. In that case it is the expected that the bus company should check the driving records of any candidate before they hire anyone.

So What Should you do When you are Applying for Jobs?

So when you are applying for any job, you can be rest assured they will not be asking about your credit report first and foremost. First of all, the employers would want to screen out all the candidates who aren’t even considered fit for such a job.

It will cost some money so that you can get a proper credit report or even a employment background check and there will be no reason to pay when the application is otherwise not qualified.

A recent survey stated that 2% of companies do check credit history and ratings before the interview and about 60% wait until the offer has been extended. If they happen to check your credits, it could be a chance that you’ve done a good job in the interview. However, it would be better if you could see what is inside that report before you look for that job. You may also sign up online to get more details and further assistance.

Be Ready for the Check:

1. Get a copy done:

Number one! You should get a small copy of the credit report first of all. Check in case there are any wrong or false information given. Then see if the records are matching and are honest. You should also ask your older employees to give you copies or your older files. Make sure you do have an idea of what your references will be saying about you.

2. Check if the application is right:

Secondly, see whether the resume and application are honest and accurate enough. If you happen to get caught and you will at some point, you will end up getting fired and that will completely ruin your job history because your resume will require some enhancing.

What Information should Never be given Away during Background/Credit Checks?

School records are confidential and should never be given away unless the student has consented. You also shouldn’t be discriminated in case you have filed for a bankruptcy case earlier. Bankruptcies happen to be record of the public and it is easy for employers to get hold of the information.

The laws always differ from state to state when keeping a track of the criminal history comes into question. Another thing they should never check is your medical records. Even workers compensation must never be touched upon. Know that the military can give your name, salary, rank and award without asking you. Records regarding driving are confidential either.

What has Been Researched for all this While?

Some of the info which has been researched also includes credit records, criminal records, driving records, information related to education, court records, bankruptcy, compensation, criminal records, sex offender related information, military records, educational information etc.

Will this Practice come to an End in the Future?

This practice may actually come to a close very soon. The latest data collected from big cities such as New York has suggested that laws shall be made in the future so that employers are prohibited from checking credit reports and histories when they are hiring, unless if the circumstance demands for it.

Apparently, this law shall be implemented in California, Connecticut, Delaware, Oregon, Nevada, Maryland, Hawaii. National legislation could make a few similar restrictions of the land as well.

Changes will be made but we don’t know exactly when. However, the practise has definitely become a nuisance for most employees and a solution to the problem is needed as quickly as possible.

This brings the post to an end. Hopefully by this article you have clearly understood why credit ratings, reports and histories are checked by employees. Always remember that in most companies, employees are not allowed to do so but in some cases they are. Don’t let anyone check on you unless you are 100% sure about it. Also if you have some comments or feedback to give regarding the post, please let us know in the comment box below. We would love to hear from you. Also if you have doubts or queries, you can get back to us about that as well. On that note, good luck and here’s hoping you have a better idea on credit rating.