Hiring for a position? Are you conducting a credit check on your candidates?If you have not given time to these questions as yet, then its time you do.
Credit check is valuable to employers for seeking added insight into a prospective employee. It reveals information about a person and their past credit history. Credit default is basically a behavioral trait relating to one’s ability to manage finances.
Employers hiring for a financial position or job where an employee may be responsible for handling financial assets, directing the course of the business or who have access to sensitive information, may or may not request a credit check. As is the case with all round background screening, employee credit checks should be conducted in strict compliance with policies in the concerned country.
A credit report completed for employment purposes is considered a part of overall background screening and includes the following details:
Collections: number of accounts that have not been paid and are in collection.
Trade accounts: number of open accounts listed for the individual (loans, credit cards)
Negative accounts: number of accounts that are delayed for payment or have been charged off already
Satisfactory accounts: number of trade accounts that are paid according to agreed terms
Inquiries: number of times creditors have requested a credit check on that individual
Public records: number of public records on the report (bankruptcy, tax liens, civil judgments)
Imagine a situation! You are hiring someone for the position of a Finance head, you think you have found your perfect candidate with the best suited credentials. Wait a moment! And re-think. Have you ever thought that this person could be a credit defaulter? A credit check is a hygienic for a reassured hiring decision, tracking the lifestyle of the candidate. A candidate with a bad debt may have a higher probability of embezzlement.
Employee credit check can provide employers with insight into a candidate’s sense of financial responsibility and stability. A candidate whose credit record includes bankruptcy could suggest that the candidate lacks sense of responsibility, by not meeting his/her financial obligations on time.
A thorough credit risk analysis can help to identity a candidate’s potential proclivity to commit fraud based on their financial status. This information could be used as a differentiator between two candidates with similar qualifications and credentials when assessing risk to the employer. Adding credit check to the list along with employee background checks can protect against internal fraud and theft.
The question employers need to ask themselves is “when is it required to conduct credit assessment as a part of the screening process?” The employer can ask himself a few questions to determine if an applicant’s credit is relevant to the position they’ve applied for or he may be taken in any which way.
Once received the results of a credit check you’ll need to determine what parts are relevant to disqualify an applicant from employment or not disqualify at all. Although, a credit check is not a conclusive check.
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