Realistic Insights From Pre-Employment Credit Checks

When hiring a new employee, performing a pre-employment credit check is customary as part of the screening process. Some industries require a credit check and many employers perform a credit check as a general hiring policy. But what does a pre-employment credit check tell you about a new hire?

There has been some controversy about how credit checks influence hiring decisions. As an employer, it is important to know how to translate a pre-employment credit report to gain realistic insights about the person you are hiring.

What You See in a Pre-Employment Credit Check

Employers do not see an employee’s credit score. They receive a custom  credit report containing a few key details including:

• Full name and address
• Accounts and use of available credit
• Payment history
• Work history details
• Bankruptcies and liens

What can you learn from this information? You can safely draw a few conclusions that may relate directly to the duties and qualities of the role you are hiring for.

Organizational Skills

An employee’s credit payment history can indicate their overall organizational skills. Someone who has their finances squared away and always pays their credit cards and loan installments on time is more likely to be organized. Whether they use automation to stay organized or naturally keep a budget and schedule will not be clear. However, they can handle accounts and keep up with payments.

A person with many late payments and an unstable payment history may indicate someone who is more absent-minded. They may not track schedules or use automation tools naturally to keep up with their payments.

Finance Handling Skills

A person who has a clean and well-managed credit history is more likely to have good instincts or skills when it comes to handling finances.  However, a person with a flawed credit score does not necessarily indicate someone who is financially unreliable or irresponsible. It is important not to conflate the two to avoid pre-employment credit check bias.

Potentially Risky Behavior

A person with a large number of credit accounts accounts in delinquency, and a high use of their credit capacity may tend toward risky – or at least poorly managed – financial behavior. A messy credit report and accounts in poor standing are considered a red flag, but not necessarily an indication of criminal behavior.

Identity and Work History Confirmation

Employment credit scores also supply any work history information that has been reported to the credit bureaus. Combined with the person’s full name and address, this is a good way to make sure your hiring candidate has been honest about their identity and work history.

Getting the Full Picture With TruDiligence

When seeking insights from a pre-employment credit score, you need a comprehensive employment credit report and the ability to read what it is telling you. TruDiligence can provide you with a detailed and fully compliant pre-employment credit report. From there, be sure to ask key questions in the interview and give candidates a chance to explain any issues with their credit report (such as medical debt, identity theft, or youthful follies) before drawing conclusions that impact your hiring decisions.