Background Credit Checks

Credit report

There is a lot you can tell about a potential hire from their credit history. In cases where a  background check is required, it can give you a better idea on what kind of life they are living rather than what’s on record from years past. 

For example an excessive amount of late payments could indicate that a potential hire is not very organized, responsible, or consistent at living up to agreements. Another thing that is gleaned is their financial stress.  Please keep in mind that every person has a different life story and circumstances that has brought them to where they are in life today. Just because someone has a lot of debt, does not mean they are irresponsible or will steal from your company, but it can give you insight into red flags to look for. Mishandling your own finances could indicate a poor fit for a job that involves being responsible for company money or consumer information. 

 

Potential employers see a modified version of your credit report. The report omits information that might violate equal employment regulations, such as your birth year or marital status. An employer credit report does not show a potential hires credit score or disclose any account numbers. However the report will show a payment record, the amount owed and available credit.

 

The credit check counts as a “soft inquiry” on your credit, so it does not take points off an individual’s credit score, the way a credit card application might. It also won’t show other soft inquiries. Potential employers can’t see if other employers have checked on their credit history. 

 

Notification and permission: An employer must notify you if they intend to check your credit and must get your written permission. The Fair Credit Reporting Act requires the notice to be “clear and conspicuous” and not mixed in with other language.

 

Several cities and entire states do have laws prohibiting employer credit checks, and restrictions on how the information from reports can be used. Check with your state’s labor department or your city government to find out if you are covered by the laws. 

 

Labor Laws https://www.dol.gov/whd/contacts/state_of.htm

 

By Vince Vitale 

Sources:  

https://www.eeoc.gov/eeoc/publications/background_checks_employers.cfm

www.business.ftc.gov/documents/bus08-using-consumer-reports-what-employers-need-know

www.business.ftc.gov/blog/2011/06/fair-credit-reporting-act-social-media-what-businesses-should-know

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