Credit Checks in Background Checks – What Matters and What Doesn’t

A credit check can seem scary, but it doesn’t have to be.

Based on the job description, many employers will conduct a financial check before hiring. But in certain situations, a credit check comes with specific restrictions. Will a credit check make or break your interview?

What do employers NOT want to see on a credit check?

Here is what Rod Griffin, publication education director at Experian, one of the three main national credit reporting bureaus, has to say regarding credit checks: “I don’t like seeing bankruptcies. I don’t like seeing collections. I don’t like seeing large student loan debt.”

When are credit checks used?

The vast majority of employers do some kind of background check on new hires. But depending on the job, your employers don’t always need a credit check. In some cases, a credit check may not be relevant. In addition, several states have restrictions on when and how they can perform credit checks. “Credit checks tend to be most common when companies are hiring top managers or employees who work with money, such as accountants and store clerks,” says Rod Griffin.

Why conduct a credit check?

The main concern for employers is that if you are in financial distress, you may be susceptible to bribery. Credit checks can also help gauge potential for thievery, embezzlement, and other criminal activities, although most background checks are sufficient to provide peace of mind against such concerns. In fact, some employers simply conduct credit checks as an extra step in identity verification. In summary, unless the job for which you’ve applied involves working with money or is a high-level position, your personal credit will likely not be a determining factor in your hiring.

Want professional guidance on how to do your business’s screening? Contact us at ClearStar today.

At ClearStar, we are committed to your success. An important part of your employment screening program involves compliance with various laws and regulations, which is why we are providing information regarding screening requirements in certain countries, region, etc. While we are happy to provide you with this information, it is your responsibility to comply with applicable laws and to understand how such information pertains to your employment screening program. The foregoing information is not offered as legal advice but is instead offered for informational purposes. ClearStar is not a law firm and does not offer legal advice and this communication does not form an attorney client relationship. The foregoing information is therefore not intended as a substitute for the legal advice of a lawyer knowledgeable of the user’s individual circumstances or to provide legal advice. ClearStar makes no assurances regarding the accuracy, completeness, or utility of the information contained in this publication. Legislative, regulatory and case law developments regularly impact on general research and this area is evolving rapidly. ClearStar expressly disclaim any warranties or responsibility or damages associated with or arising out of the information provided herein.