In our brave new world of Google and social media, checking a potential employee’s online presence and Twitter and Facebook profiles is the norm. But have you considered also running a credit check on a promising candidate before offering them a job? If so, you’re not alone; in a survey conducted by the Society for Human Resource Management, an incredible 47% of hiring managers admitted to conducting credit background checks on candidates.
It’s important to note that a credit check isn’t relevant for every job role. Broadly speaking, there are three main areas where your HR department would do well to delve into an individual’s finances. The first is where the job role involves a senior executive position, in particular one that includes fiduciary and financial responsibility, such as a CEO or CFO. The second is where a position allows access to confidential employee details or sensitive information. Finally, if a post requires a candidate to handle a client’s money or possessions, such as a solicitor, a credit check should be an essential part of the due diligence process.
As Stephanie E. Lewis, lawyer at US employment law firm Jackson Lewis LLP, says: “It’s a correct and logical conclusion that dangling an opportunity to steal in front of someone who is living beyond their means is an unnecessary risk.”
If you do run a credit check on a potential employee, remember that not all negative information should affect your hiring decision. Remember that the purpose of a credit report is to raise red flags, but shouldn’t necessarily lead to ruling out an otherwise promising prospect. For instance, if a candidate has faced recent financial hardship this could have adversely impacted his or her credit rating. However, this does not necessarily mean they will make a bad or untrustworthy employee.
These money issues could have been due to the recent fall in property prices, for example. Having said that, financial worries could affect the candidate’s commitment and productivity when it comes to work, so it’s important to keep an eye on this and implement any processes to support the candidate.
Conversely, if you discover any of the following information on a candidate’s credit report it should raise alarm bells:
If you do find any worrying information on a credit report, the first step should always be to speak to the individual in question. They may be able to explain the reasons for any negative financial information and this could prevent you from discounting an otherwise strong candidate. Remember also that some of the information resulting from a credit check could be incorrect, so it’s important to get all points verified.
In any case, it’s essential that a credit check forms only one factor in your overall decision when deciding the best candidate for a role.