Credit and Background Checks

Nick Fishman

Many companies utilize credit checks as part of their pre-employment screening programs.  While credit checks are often confusing, they can shed light on an applicant’s personal responsibility.  It is important for employers to bear in mind the following when contemplating this type of search.  First the basics, you must have a signed authorization from the applicant before you can check their credit.  Second, you want to make sure that credit is not the only thing that you look at to determine an applicant’s suitability for employment.  Other valuable pieces of a background check can include a criminal record search, employment verifications, education verifications, etc.  Next, you want to make sure that you evaluate how poor credit might affect your candidate’s ability to work in the position they seek.  Credit checks are great for executive level applicants, those in the financial sector or those and, or those with access to large amounts of money.  For others, the extension might not be so obvious. 

Next is understanding the different between an Employment Credit Report and a Consumer Credit Report.  There are many differences that require far greater explanation, but the for the purposes of this discussion let’s point out a couple of the highlights.  A Consumer Credit report contains a credit score (which cannot be used as part of the hiring decision) and account numbers (which an employer shouldn’t need to make a hiring decision).  Running them also counts against the applicant’s credit score, unlike the Employment Credit Report.  For simplification purposes, this makes the Employment Credit Report the preferable of the two. 

Lastly, there are three primary credit bureaus in the US.  They are Experian, Equifax and TransUnion.  Information can vary from bureau to bureau, but as far as determining the best, all three have their strengths and weaknesses.

Now comes the hard part.  Making employment decisions based on the results of a credit report.  And that my friends is something that can and should be dealt with on a unique employer by employer basis.

Nick Fishman
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Nick Fishman

Nick Fishman is the co-founder of EmployeeScreenIQ, a leading, global employment background screening provider, and serves as the company’s executive vice president and chief marketing officer. He pioneered the creation of EmployeeScreen University, the #1 educational resource on employment background checks for human resources, security and risk management professionals. A recognized industry expert, Nick is a frequent author, presenter and contributor to the news media. Nick is also a licensed private investigator in the states of Ohio and Texas.
Nick Fishman
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