Money and financial status are two very private, personal things. They are often not discussed even among friends or family. Secrets may exist in one’s private handling of money, but anyone applying for a new job may be shocked to learn that potential employers can access some of this information about you.
What Companies See
A company that is peering into your personal finances is not going to get a copy of your credit score. Also, they are not going to see personal purchases or money currently in your bank account. However, they will be able to receive a modified report from the credit bureaus that can give them some hint as to how many late payments you have made in the past.
Why They Care
Why would any potential employer want to know what was in your report in the first place? NerdWallet summarizes it with these three basic reasons:
- Lots of late payments could indicate you’re not very organized or responsible, or don’t live up to agreements
- Using lots of available credit, or having excessive debt, are markers of financial distress, which may be viewed as increasing the likelihood of theft or fraud
- Any evidence of mishandling your own finances could indicate a poor fit for a job that involves company money or consumer information
Each of these reasons makes sense from the employer’s perspective. They want to know what they are getting when it comes to potentially hiring a new person. Surprisingly though, fewer than one in ten employers say that they always check an applicant’s credit history when surveyed. That number is likely to increase when more employers realize the benefits.
Avoiding Fraud and Theft
Just because an individual has a poor history of debts, does not mean that they are going to steal from their employer. However, it can be a sign that there is real financial distress in their life, and that may make the opportunity to potentially steal from the employer look that much more appealing. It is not completely out of the question. Thus, these kind of background checks are very important to avoid any kind of potential threat to the business itself.
Learn More About Why Employment Screening Should Include a Credit Report
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