Reveal characteristics about your applicant’s financial management capabilities, behavioral patterns and attitudes toward finances.
Credit history reports provide a profile of your applicant’s personal financial management history – including indebtedness, payment history and public record information such as tax liens, judgments and bankruptcies. Inquiries are reported for “employment purposes” and are in compliance with the Fair Credit Reporting Act. Credit reports obtained for employment purposes do not include a FICO score (nor should they). You are not granting credit, but rather identifying poor fiscal habits such as living beyond one’s means or racking up unnecessary debt with no immediate plan of repayment.
Some state laws restrict employers from pulling credit reports or limit how the reports are used in the hiring process. There are a few exceptions for specific positions at the state department of justice, and positions with access to financial or personal data. Be sure to check the state legislature website for any states in which you do business for specific details. Also, as more laws are being legislated at the local level, it’s important to stay up-to-date to ensure your policies and procedures are compliant with local laws.
Even if there are no regulations affecting your use of employment credit reports, consider the nature of the position you are looking to fill. Is the information found in a credit report relevant and necessary to know for the position? If the responsibilities of the job call for the employee to handle money, assets, clients’ personal information, or proprietary company data, the information provided in the credit report may be very useful.
To get more information on using employment credit reports as part of your background checks – contact us today.