What Do Employers Look At On Credit Checks?

Employers usually use credit checks to gauge the trustworthiness and aptitude of employees in managing money. Often hiring committees to think employees who skillfully oversee their finances would do the same for the company and high-stakes projects at work. Employers who run credit checks see a limited version of the employees’ credit report. It includes personal information to verify the identity of the employee; loan and credit card accounts; payment history; and employee’s Social Security number. It won’t include specific account numbers.

The credit report details of the employees include credit histories, such as any credit card account information, their balances, their available credit, and their payment history. A good credit score means that the employee is a good credit risk (more likely to repay a loan). However, a low credit score means the employee is a poor credit risk. To get a proper insight into a potential hire, employers often perform check credit. Credit check also reveals signs of financial distress that might indicate risk of fraud or theft. Employees do not get the credit score of their employees, but instead, they see a modified version of employees’ credit reports.

Why Would An Employer Look At Your Credit?

The credit history of an applicant can flag potential problems an employer would want to avoid. Having excessive debt or using lots of available credit are markers of financial distress. Financial distress may be viewed as increasing the likelihood of theft or fraud. Lots of late payments could indicate that the employee is not very responsible or organized, or doesn’t live up to agreements. Any evidence of an employee mishandling finances could indicate that the employee is a poor fit for the job. The employees should always be responsible for company money or consumer information. When a potential employer checks the candidates’ credit history to see how they have handled consumer debt, an employment credit check takes place. Employers obtain this credit history report from third-party companies

How Employment Credit Checks Work

Once an employee has been offered a job or a promotion, the employer will request a credit check from a third-party Background Verification company like Millow. A reliable employment credit report includes identifying information, such as the address, Social Security number, name, previous names, and addresses of a candidate. The employment credit report also shows the debt the employees have incurred, including mortgage, student and other loans, credit card debt, car payments, and their payment history of those loans and debts, including late payments.

However, certain details are not included in an employment credit report. This includes the candidate’s date of birth. This information is often excluded as it could be used to discriminate against applicants due to age. An employment credit report also doesn’t include the credit score of the candidates. Companies or organizations hiring for positions involving access to trade secrets, funds, and otherwise sensitive information are more likely to request a credit report than companies hiring for other positions. Bad credit could indicate a corporate criminal or a bad employee. A credit report shows your payment history and how long you’ve had the credit accounts.

Will Credit Score Affect Your Employment?

Your credit score is one of the major factors that serve as a benchmark to know your financial well-being. Many employers and almost every financial institution use this tool to gauge the credit repaying discipline of the candidates before lending or hiring them. Therefore, a bad credit score may sometimes serve as a reason behind the rejection of candidates. A credit score is important for job applicants as it will boost their chances of getting employed. A Credit Score shows your creditworthiness. A lender determines how responsibly a job applicant is in managing their finances through a credit score. It is generally recommended that the employees check their credit score and report regularly to maintain a healthy credit rating. You should immediately contact your lender or credit bureau to get the mistakes rectified if you find any discrepancies or errors in your report.

There are many reasons for which organizations check the credit report of their employees. Companies check the credit report to keep an eye on the candidate’s reckless nature, evaluate their trustworthiness, and find out risky financial conditions. Organizations check the credit report of their employees to know their repayment behaviors during the past. If the companies find their employee struggling in meeting the debt obligations on time, it will reflect the employee’s reckless nature towards making payments. If the candidates have a good score, it creates a good impression in the mind of their employers which further boosts up their chances of employment. If a company asks for the credit report of the candidates and finds that they have a good credit rating, they may consider these candidates trustworthy.