Why Employers Check Credit

One of the most common parts of an employee background check is the credit report. It’s true that employers can learn a lot about a job candidate by viewing their credit history, but what exactly are they looking for? How an individual handles loans, credit, and other finances can say a lot about who they are and how they’d perform in a specific role or company. If you’re applying for a job or hiring for your company, it’s important to know what to expect from a credit check. Start with the basics by checking out this list of reasons why employers check credit during a background screening.

Verify Your Identity

Much of the background check process simply allows employers to verify the identity of their potential new hire. A credit report comes with identification information about the candidate. Comparing this information to other parts of a background check is a way to further verify someone’s identity during the screening process. This helps businesses prevent fraud and keep their current employees safe as they make informed hiring decisions.

A Statement of Character

An individual’s credit report can also say a lot about who they are as a person. For example, say someone has a significant amount of debt or continuously overcharges their credit card. This behavior implies the individual is experiencing financial difficulties, possibly due to careless budgeting and money management. On the other hand, someone who always pays bills on time or pays ahead on their loans displays a sense of financial responsibility. Which individual is more likely to make a productive, dependable employee? Employers often view credit reports as a glimpse into someone’s character and how they’ll handle the responsibilities of the job for which they’re applying.

Can You Handle Money Responsibly?

A credit report becomes particularly important when screening for jobs that involve financial responsibility. Banks, accounting firms, and other employers that need their employees to reliably handle money use credit reports to ensure they can trust their clients’ finances with their new employees. This is one of the biggest reasons why employers check credit. If a job candidate has a record of mishandling their own money, employers are less likely to trust them in a job that focuses on finances.

Employers can gain a lot of information from checking a candidate’s credit history, but it’s important that they follow federal guidelines and respect employee rights throughout the process. This is why many companies outsource their screening process to a reliable and secure professional background check company such as PSI Background Screening. When your credit checks and other background screenings are compliant and fair, you can create an effective hiring process that protects your candidates as well as your current employees and business.