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Credit Checks

Assess financial responsibility to minimize risk. A clean credit history doesn’t necessarily prove that a candidate has integrity.

Credit Checks

Why Credit Checks? Integrity Beyond Doubt

Some jobs require that an employee has unquestionable integrity and honesty. Perhaps the employee has access to your company’s or your clients’ financial assets, or the employee’s responsibilities include entering into financial transactions on behalf of your company. Assessing characteristics like integrity and honesty are difficult, but credit checks can help. It’s important to note that several states and even some cities have laws restricting the use of credit checks in candidate screening, so please review the information below, under “Compliance Uncomplicated.”

A clean credit history doesn’t necessarily prove that a candidate has integrity, but a problematic history should raise questions that deserve further explanation. Performing appropriate credit checks in employment screening can minimize your company’s risk of theft, embezzlement and liability.

Credit Checks

Spot Potential Red Flags

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Standard Checks

Used by banks, landlords and others, and include a credit score.

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Employment Credit Checks

Do not include the score. This helps ensure that employers consider factors and circumstances, rather than using a single numeric score.

Employment credit checks do not impact a candidate’s credit score the way a standard one can. They show you, as an employer, things like open lines of credit (mortgages and credit cards), outstanding balances, and student or auto loans. Most importantly, they can reveal late or missed payments, foreclosures, bankruptcies and collection accounts.

Credit Checks

Compliance Uncomplicated

Several states have laws restricting the use of credit checks in employment screening. When credit history has no bearing on the open position, a credit check is considered discriminatory. When credit history does have a bearing on the position, credit checks are allowed in specific situations, including:

Credit Checks

Some key considerations

Federal legislators have proposed such laws on a nationwide basis, but so far none has passed. While your company will bear ultimate responsibility for compliance, we’re here to advise you. Criminal background checks must comply with the Fair Credit Reporting Act (FCRA), Equal Employment Opportunity Commission (EEOC) guidelines, as well as local, state and federal fair hiring (ban the box) laws. If a credit check compels you to deny employment, follow the steps outlined by the FCRA. Some local laws also outline specific steps for adverse action.