Tag Archives: Credit Check

Here’s a checklist for when to request a credit check

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All these new Equal Employment Opportunity Council guidelines on background checks have caused many employers to reevaluate the way they conduct their employment screening, as well as the justifications for each type of report they request on every potential new hire. While that is a positive outcome, and the desired one, from the EEOC’s standpoint, it has caused some employers to be a bit confused about just what is acceptable and OK in regards to the various types of background checks they’d gotten accustomed to using without question for just about every hire.

So when is it acceptable (and a very good idea) to request and use a credit check as part of the employment screening process?  Here’s a checklist:

  • When the position you are hiring for involves access to confidential financial information.
  • When the employer is a bank, credit union, or other financial institution.
  • When the position in question is a law enforcement officer, emergency medical personnel, or a firefighter.
  • When the position of employment requires a financial responsibility to the employer or a customer. Responsibilities might include authority to issue payments, collect debts, transfer money, or oversee contracts.
  • When the employer can demonstrate that the information is a valid and reliable predictor of employee performance in the specific position of employment.
  • When the position of employment involves access to an employer’s payroll.

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Tips for employers on hiring smart

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It’s no secret that the smartest employers hire professional employment screening services to handle the background checks of its would-be hires and employees. But wise employers understand that merely signing a contract with a background check company doesn’t ensure that your business will only hire the very best applicants for every position. An employer needs to remain attentive and insightful during the hiring process. Don’t check out just because you’ve paid someone to check them out.

Here are a few things every employer should do to stay present in the hiring game and be sure your company is making the best decisions for its future:

1. Weed through the applicants before beginning background checks. It’s a costly and wasteful move to have every single applicant undergo a background check, so don’t use that as your first step toward finding quality applicants. First study their resumés, conduct phone interviews and check references. Then you can hand-pick a select few top applicants to undergo the background check process.

2. Be smart about what to check. A qualified employment screening service should be able to tailor the type of background check to the type of job you’re trying to fill. For example, not every applicant for every job needs to undergo a credit check.

3. Check the background of the company you’re hired to complete your background checks. There are a ton of businesses out there that purport to be thorough, fast employment screening services. But many of them are not reputable, and anything but thorough. Check the credentials of the employment screening service you’re thinking of hiring. The last thing you want to do is sign on with a scammer.

4. Know the law. Laws and regulations regarding discrimination and privacy concerns in background checks vary from state to state, so do some research into what is the acceptable protocol where your business is located.

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Is the Use of a Credit Check Always Legal?

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More and more employers are choosing to use credit checks on employees as part of their pre-employment screening process. The thought is that looking at a person’s credit report is a pretty good indicator of whether that person is fiscally responsible and, therefore, possesses at least some of the traits that make up a good solid employee.

But it’s important for an employer to tread lightly and be careful in regards to credit checks, as some laws regarding the use of credit checks are different from state to state. For instance, some states, including Oregon and Washington, only allow an employer to use a credit check on an employee if it’s truly applicable to the job, such as an accounting position. If you want to use a credit check on someone applying for a position in, say, sales or marketing, then a credit check would be illegal. And according to the federal Fair Credit Reporting Act, you always have to ask an applicant’s permission to run a credit check.

Credit checks can be a great resource to use when deciding who is right for a particular job. But keep in mind that laws are being changed and fine-tuned regarding their use in the private sector. Some state lawmakers and in Congress are mulling over bills that would limit the usage of credit checks for employers. So keep up on the laws that apply to your business in your state, and make sure the employment screening service you hire is on top of things too.

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Use Credit Reports Wisely — and Legally — When Vetting Applicants

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There has been much controversy and buzz surrounding the use of credit reports during the process of conducting background checks for potential hires. Many job applicants are confused about what exactly their credit history has to do with their ability to perform a specified job. Others are wary of too many people knowing their credit score. Still others think that the pre-employment screening process of obtaining a credit report will lower their overall credit score.

Employers need to be clear about why they’re preparing to do a credit check, and they need to get the applicant’s permission to do so, according to the rules of the federal Fair Credit Reporting Act. If the results of the credit report adversely affect the employer’s decision to hire, the applicant is entitled to obtain a copy of their credit report and to challenge anything they see in it that they deem to be false.

Before conducting a credit report, or even asking for permission to do so, employers should ask themselves whether the information contained therein is really necessary for the applicant’s success in that particular job.

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Don’t Let Poor Credit Be the Sole Factor For Determining Employability

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Checking a job applicant’s credit score is among the many ways employers are checking up on prospective employees to get a better idea of their personal history and how responsible they are. Unfortunately, in today’s tough economic recession there are plenty of job applicants out there who are both fiscally responsible and suffering from the fallout of job loss, home foreclosure and mounting debt as families try to stay afloat financially with less money coming in.

That’s why it’s important for those employers who are doing a credit check on their job applicants’ to keep a few things in mind:

1. Does the job the person is applying for deal with company finances, personal information or include a security clearance? Consider whether the job in question would be performed to the same level of professionalism by someone with less than stellar credit.

2. Pay close attention to the rest of the application and the other results from a pre-employment screening that is performed on the job applicant. Nobody likes to be judged on just one aspect of his life, and no job applicant should be judged based solely on a number. Instead let your instinct, careful review of all documents, and the interview guide you.

3. Be aware of the law. It is unlawful to deny someone a job based solely on his or her credit score.

4. If you’re on the fence, be honest about your qualms. Talk to the applicant a little more, and see whether the details and recent life history they give lines up with what you found in your background check.

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SHRM Tells EEOC to Reconsider Their Views on Background Checks during Hiring

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The U.S. Equal Employment Opportunity Commission (EEOC) has striven to ensure that all workers be given a fair shot at obtaining jobs.  However, the organization’s vigilance has often come at odds with employers’ abilities to use background checks, specifically credit checks, as a measure of weeding out applicants with questionable records.

Consequently, the Society for Human Resource Management (SHRM) has urged the EEOC to reconsider its position in regards to credit checks, citing many types of workers who should ideally have excellent credit records in order to obtain certain positions.  (As an FYI, we’d suggest anyone with access to his or her employer’s financial records or cash be screened via a credit check background check.)

Without a doubt, the EEOC is simply trying to make certain that no potential employees are unfairly eliminated from a job applicant pool.  But SHRM makes a strong argument for the employer’s side of the coin, as performing background checks (including those regarding credit reports) offers protection for workers, companies, vendors, volunteers and customers.

Want to Become a Reality TV Star? Be Prepared for Intensive Background Checks!

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After several fiascos regarding reality TV stars in the past year (not the least of which was a shocking murder/suicide), anyone wishing to join the Real World cast or “Survivor” will have to submit to intensive background checks.

How will these background checks differ from those previously done for reality stars and starlets?  First of all, they’ll actually be followed through.  (There’s been much speculation that certain checks weren’t completed at all for some reality show contestants.)  Secondly, casting directors and producers will be more inclined to delve beyond a simple credit check or criminal check into the “meat” of an actor’s or model’s past. 

So does this mean an end to flamboyant reality TV icons like VH-1′s “New York” or the “Real Housewives”?  Probably not… just as long as they can get past a thorough screening process.

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    • What Does a Bad Credit Report Mean?

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    Employers are increasingly conducting credit checks on potential new hires, but not all of them understand how to interpret the data.  After all, a credit check report doesn’t equate to simply receiving a credit score; in fact, it’s much more comprehensive… and that can make evaluating it complicated.

    So what does it mean if a potential employee’s background check comes back clean but his/her credit check comes back with “black marks” (figuratively speaking, of course)? 

    Here, we’ll look at a quick way to determine how the credit check data potentially affects your decision:

    1.  Typically, if a person is to have any financial responsibility, you want someone with a squeaky-clean credit check report.  If he/she cannot handle his/her own finances, do you want him/her to handle your company’s?

    2.  If you see that a person owes a great deal of money and will be in a position where he/she can have easy access to your business’s cash, you might want to think twice about making a job offer.  Many cases of embezzlement occur because the embezzler is deeply in dept.

    3.  If you notice that the individual consistently makes numerous late payments (or skips payments), it could be a sign that he/she isn’t dependable.  While it’s not necessarily a total deal-breaker (especially if the late payments were five years ago), you do have to ask yourself if he/she will be late with other items, such as projects and assignments.

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    • Parents Have a Right to Know Who’s Working with Their Kids

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    Many parents would probably be shocked to know that numerous organizations that hire volunteers to work with kids have no formal rules regarding background screening of volunteers or team members.  Several will cite ”the cost” as an excuse; others will say it’s not necessary because they “know” the people well enough.  That means that mentors, tutors, coaches and other staff are not properly investigated before they are brought on board.

    It’s a scary thought, isn’t it?

    This is the reason that it’s absolutely critical for moms, dads and grandparents to begin asking the question:  “Do you background screen your volunteers and/or employees?”

    If the answer is “yes”, you can inquire further as to what kind of investigation is conducted — do they look into criminal backgrounds or merely do a credit check?  Are employees and volunteers randomly tested after they are brought into the organization?  Don’t be intimidated if the organization’s representatives balk at your query.  It’s your right to know who is working with your kids.

    Of course, if the answer you receive is “no”, you will be in a position to make a serious decision.  Obviously, we recommend never allowing your son or daughter to be alone with a volunteer or employee who has not been background checked.  There have been far too many news stories of terrible incidents happening when adults take advantage of unsuspecting youngsters. 

    It takes very little time to make an inquiry.  Make sure it’s something you do without fail, as you’ll never regret the knowledge you obtain.