Credit Records & Hiring

Credit records, such as credit reports, are sometimes reviewed during the hiring process for a job. Background checks for criminal activity are standard for most jobs, but employers have varied views on reviewing credit reports and scores. Some employers in financial services or banking may order request permission to fully check credit reports because of the nature of the industry. Other employers may not check at all, or review reports only for extreme credit issues such as bankruptcy.

Privacy

Privacy laws prohibit employers from checking credit records without written consent from prospective or current employees. The consent is usually a part of standard consent forms for background checks. Prospective employees have the right to ask what is included in background and credit checks, and can refuse to participate although that could eliminate the prospect as a candidate.

Considerations

Employers follow their own guidelines on when to review credit records for potential new hires. Employers usually conduct background and credit checks after deciding on a specific candidate for an offer. That often comes late in the hiring process after an interview or following multiple interviews. An employer wanting credit reports usually orders them through a third-party firm specializing in pre-employment screening.

Disclosure

Employees who fail a credit review may never know why the employer selected someone else. Generally, employers do not disclose reasons for not hiring a person. That protects the employer from making statements that could lead to accusations of hiring discrimination. Candidates who expect a credit check as part of the process should consider submitting a letter of explanation if their credit is poor. Presenting the letter with the credit review consent form allows the employee to explain the credit issues before the hiring manager learns learns about them from the credit review.

Followup

Privacy Rights Clearinghouse, a nonprofit consumer information company, reports that employers usually have the right to continue checking credit records even after the employee begins work. The credit records consent form often gives the employee the right to continue the reviews in the same way that credit card companies can continue checking the credit of its customers. Employers who check credit may continue to do so because the employee is in a sensitive position, such as handling money or having responsibility for a large spending budget. Employers may require employees in those positions to exhibit strong personal financial responsibility. Updates on credit can determine if an employee is suffering from credit and financial issues.