Published in Debt Advice Features on Monday, May 16 2005

A trend of running credit checks on prospective employees is starting to alarm job seekers. In recent years an increasing number of employers have begun using credit checks as part of their standard selection process when hiring new employees. Employers state running credit checks is a good way for them to determine which candidates can be considered responsible and which ones can’t. They look to past and present credit problems as an indication that prospective employees might be irresponsible in their professional lives and may have the potential to mishandle funds. Apparently, employers feel that given the right, or wrong, circumstances anyone can behave in an uncharacteristic manner and become a potential thief. This trend is becoming increasingly popular in industries where employees handle large sums of money or else have access to perks like expense accounts. Companies are also concerned employees with money problems might be tempted to develop sticky fingers and lift expensive objects they can later sell to raise cash.

Employers are also running credit checks on current employees in order to make decisions regarding promotions and in some instances, terminations. While an employer might be opening the path for an unfair dismissal suit for firing an employee over a credit check, the fear of lawsuits doesn’t seem to be stopping some employers.

Some employers seem to feel the cost, and the risk, are worth the valuable information they can obtain from running credit checks. The process of running a credit check involves a fee paid by the employer, but given the high cost of training a new employee and the risk of loss due to theft, many companies feel the fee is worth it in order to insure they are hiring an employee they can trust.

Critics state running credit checks for the purposes of selecting a job candidate is an invasion of privacy and discriminatory. Job seekers are concerned that past credit problems, which may have occurred through no fault of their own, will keep them from being hired for jobs that would have otherwise been a perfect match for their skills and experience. In many instances individuals are realizing that mistakes made even years in the past may keep them from landing their dream job. In other circumstances, bad credit resulting from divorce, job loss or medical situations are having a negative impact on job
seekers.

Employers defend themselves by claiming they aren’t doing anything they don’t have permission to do. Since credit checks can’t be run without authorization by the person involved, many job applications now carry this release as a standard inclusion. Job seekers who aren’t careful to read over the fine print, however; may find themselves agreeing to have a credit check run on them and not even be aware of it. Still yet, others may realize what they are agreeing to but feel powerless to stop it. The reality is that job seekers know refusing to submit to a credit check is tantamount to losing the job anyway. Employers who insist on running a credit check won’t be likely to hire a candidate who refuses to comply.

Among the information an employer can glean from a credit check on an existing or prospective employee is bankruptcy information, liens and judgements, child support obligations, loan and credit card payments as well as information about how else has run a credit check on that same individual.

Employers who run credit checks on prospective and existing employees are looking through this wealth of information for a few key pieces of data. Specifically, they are looking to find out whether employees pay their bills on time and if the bills are late, how late they are. In addition, they are looking for bankruptcy information and any information that may indicate there has been a lawsuit in the picture.  Finally, one of the most disturbing pieces of data employers are looking for is confirmation of the applicant’s identity. In a world where identity theft is becoming more common and much more dangerous,
employers are wanting to reassure themselves that they are really hiring who they think they are. Regardless of the wrongs or rights of this practice, it seems to be here to stay. The best hope a job seeker has of combating credit checks run by employers is to stay two steps ahead by keeping an eye on their credit histories themselves. That won’t erase past problems, but at least knowledge is power. Taking the initiative to step forward and explain a splotchy credit record may go a long way with employers.

The author of this content is Ryann Cairns who has been advising on Debt related issues for the past four years and has provided content for various sites across the globe. For further examples of his Debt Advice or help with Debt Consolidation check out his website.