Consider Before Conducting a Credit Check

As a background screening company there are a lot of different pre-employment searches that we can offer that we believe will provide candidate information that is both accurate and compliant for employers. However, there is one search in particular that we suggest not using when performing an employment background check.

Credit Reports for Employment

We are going to cut right to the chase. Pre-employment credit checks are a screening option that we do not recommend for our customers and here are 4 reasons why:

1. Credit Reports for Employment are Subjective

The results that appear in a credit check are subjective. In a credit report check, an employer will receive information such as name; address; employer; open lines of credit, such as mortgages, auto loans and credit cards; amount you owe on those lines of credit; late payments; and whether you’ve filed bankruptcy in the past 10 years. All of the results listed, with the exception of filing for bankruptcy, are consumer habits that should not impact the individuals’ ability to perform well at their job.

2. Employers Cannot Discriminate Solely Due Because an Applicant Filed for Bankruptcy

According to the Fair Credit Reporting Act (FCRA) employers cannot discriminate, or not hire an individual, because they filed for bankruptcy. So even if this is disclosed in the credit report it may be illegal to use when making a hiring decision.

3. All Major Financial Red Flags are Found in a Standard Criminal Background Check

If the position is of one that the employee will be handling company money a standard criminal background check would provide all relevant information. A standard criminal background check will provide information, in the event that the crime occurred, including: embezzlement, bribery, theft,

4. State and City Limitations for Performing a Credit Report for Employment

There are 11 states and 4 cities that ban the use of credit reports for employment purposes. If you are performing a credit report in one of the following: California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, Washington, the District of Columbia, Chicago, New York City and Philadelphia you putting your organization at risk of a discriminatory hiring lawsuit.

Subscribe to the latest Background Check News


Got 20 seconds? Evaluate Your Screening Provider

If you always do what you’ve always done, you always get what you’ve always gotten.