According to a nationwide survey conducted by The Professional Background Screening Association (PBSA) and HR.com, 25% of HR professionals use credit or financial screenings during the hiring process for some positions.
Conducting a credit check on a potential employee can reveal detail regarding the candidate’s integrity and character. A low credit score can indicate financial distress which may indicate a risk of fraud or theft. Numerous past due payments and charge-offs can indicate a lack of monetary responsibility.
A pre-employment credit report can be useful in determining the responsibility and dependability of a candidate
AccuSourceHR obtains credit history reports directly from the credit bureau. The information provided includes names and addresses associated with Social Security Number, accounts, bankruptcies, credit limits, delinquent payments, and child support delinquencies.
What shows up on an Employment Credit Check:
|Identifying information (name, address, SSN, etc.)
|Incurred debt (credit cards, mortgage, car loans, etc.)
|Payment history, including past due payments
Employment Credit Checks & Legal Implications:
The use of credit reports for the purpose of employment decisions has changed significantly in recent years due to increased state restrictions. AccuSourceHR provides employers with up-to-date legal compliance information to support informed decision-making.
The Fair Credit Reporting Act (FCRA) sets standards for what an employer can do during the hiring process, including guidelines for the use of credit history information. Below are guidelines employers must follow regarding the information obtained from a pre-employment credit check:
|The employer must obtain written approval from the applicant
|The report cannot include outdated information
|The applicant must be informed if the report is used to make a negative hiring decision
|The applicant has the right to see what is in the report
|The applicant has the right to dispute the information in the report
The Adverse Action Process
If an employer does not hire an applicant because of the information found in a pre-employment credit check, a specific set of actions must be followed per FCRA guidelines. This “Pre-adverse & Adverse Action Process” is explained in our detailed infographic.
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