Jobhop Jobhop's blog : Why Do Some Employers Check Your Credit Report?
Why do some employers check your credit report?
The job market is highly competitive, so employers use a variety of tools to help them quickly assess candidates and find the ones most suitable for the role. Alongside checking that applicants possess the required qualifications and attributes, some employers will also run a check on your credit report. This practice, while it may seem controversial, can help paint a practical picture of an individual and protect the company from financial stress.
Understanding why an employer might check your credit report can help you prepare and reduce any negative feelings or shock that may arise as a result of being notified of this process. So, why do some employers check your credit report?
Assessing financial responsibility
A credit report provides a snapshot of your financial behaviour and demonstrates how you handle debt and manage your credit agreements. Employers in industries where financial responsibility is essential will be keen to understand your ability to handle your personal finances, as it indicates how likely you are to be able to take on larger banking, finance and accounting responsibilities in a professional role.
A history of late payments, defaults, or high levels of unpaid debt can suggest recklessness in this area – which is understandably a red flag for those seeking positions involving money handling and company accounts.
Reducing theft and fraud
In sectors where employees have access to sensitive information about a company’s finances and are responsible for cash handling and financial transactions of large sums, employers may use a credit report to assess the likelihood of theft or fraud.
The rationale behind this is that individuals with significant financial stress may be more tempted to commit financial crimes. Whilst this may feel offensive, try to view it as protocol rather than a personal attack. It’s likely to be company policy to screen all applicants in this way, to help mitigate risk.
Verifying identity and employment history
Credit reports can serve as an additional layer of verification for your employment history and identity. Employment gaps in your CV or inconsistencies with previous job titles can sometimes be cross-referenced against a credit report, helping employers ensure the accuracy of the information you provide. This is essential in roles that require high levels of trust and financial responsibility.
If your credit history is less than ideal, it’s best to be upfront about it with your potential employer if you know they are going to run a check on your report. It’s easy to make common mistakes with credit cards, but by being honest, you can demonstrate your trustworthiness and integrity.
Keep your credit score healthy
It's important to understand that employers check credit reports for multiple reasons, but it's primarily to protect themselves and ensure a high level of financial security and responsibility within their teams. By taking steps to ensure your credit report stays healthy, you can be better prepared if you encounter this step of the hiring process and improve your chances of securing your desired position.
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- Expert