Using a Credit Report For Employee Screening

A connection exists between a person’s credit history and the manner in which they handle their social and job-related responsibilities. While having a poor credit history doesn’t necessarily mean an employee will be more prone to commit an act of theft or fraud, it’s still a useful gauge for employee screening procedures. Today, employers routinely request a credit report for each job applicant. Below, you’ll discover 3 reasons why you should do the same when hiring personnel and how to comply with the Fair Credit Reporting Act (FCRA).

3 Reasons To Use A Credit Report For Screening

#1 – Measures Trustworthiness

If an applicant’s credit report shows that she is habitually late on payments and has several accounts in arrears, that may be an indication of her trustworthiness and reliability. If the credit report reflects a large debt balance, she may be tempted to steal from the business.

#2 – Reduces The Applicant Pool

If the position for which you need an employee places that worker near cash or other valuables, you may decide upfront that a poor credit history will disqualify a candidate. By communicating this to applicants, you can discourage many of them from pursuing the position. That slims the applicant pool, saving your both time and effort.

#3 – Boosts Workplace Productivity

Weeding out job candidates with poor credit histories can increase the overall productivity of your workforce. It encourages a raised level of honesty between employees and the company. Plus, doing so also helps limit the likelihood of theft, fraud, or other activities that can disrupt daily operations.

Applicants’ Rights And The FCRA

In order to access a credit report on potential employees, you need to get their written permission. If you don’t receive permission, but still access an applicant’s credit history, she can sue your company for breach of privacy. Once you receive permission and access a candidate’s credit report, take care to not use a listed bankruptcy for reasons of disqualification. Doing so is an FCRA violation and your company can be sued. If you decide against hiring an applicant due to items listed on her credit report, you must let her know. In such cases, you’re legally required to communicate the action you’re taking and your reason for taking it.

Credit Report Compliance For Employers

If you, as the employer, neglect to comply with the FCRA, a job candidate can choose to sue your company in federal court. If they win their case, your company may have to pay damages along with the candidate’s legal fees. In some cases, the candidate can sue for punitive damages (though this typically happens only when the violations are deemed deliberate). If your company’s violations are considered egregious, the FTC and even the state may file a lawsuit.

Using credit history as a measure of whether an employee will become a valuable asset to your company is a mixed art. It’s not conclusive. That being said, there are clear advantages to doing so. The key is to respect your job applicants’ privacy rights and comply with the FCRA when accessing their credit reports.

If doing exhaustive employment background checks is beyond the reach of your company’s resources, consider hiring a professional service to do it for you. A dependable employee screening service will include an applicant’s credit history as part of their investigation.

Importance of the Employee Screening Process

Employee screening is a necessity in any business, big or small. It is the process of getting to know the company’s applicants, and if they are fit for the position they are applying for in the company. During the process, an employer or the company’s HR personnel will determine if an applicant is presenting the right information in his resume. The process will establish whether or not correct or contradictory information has been given and whether or not this applicant will be contributing positively to the attainment of the company’s objectives.

The employment process could range from psychometric, medical, and background checks and testing. Some applicants may practice answering tests that are required for the position to be filled. Screening is a very important part for any job hiring process as it allows a human resources officer or manager to evaluate an individual applying for a position.

It is basic to know information about people who are being considered to work in a company. Hence, the essential benefit of employee screening is the hiring of employees who are most likely to perform well. Good performance can be in the form of increasing the company’s revenue when the person hired is actually skilled in a certain field that is required by the company. Aside from getting a skillful worker, the employee screening process can determine if the job candidate is mentally and physically fit for the job.

These days, employers are recognizing the value not only of an employee’s diligence but also the person’s capacity to perform the job in the right place, at the right time and with the right state of mind. Employment screening is, thus, an exploration of the total character of the applicant and how this character can be a positive or negative influence on the achievement of the company’s goals.

However, this process is crucial to any individual or company as it involves a lot of aspects to be considered. One example is the legal procedure. Employment screening would involve getting to know the lives of the applicants to a certain extent.

It can be very hard for the one conducting the screening to verify the truth behind the information presented by the applicant if the means to make such verification are limited. Sometimes, the applicant is made to sign a document authorizing the company to get information about the person from schools he has attended or from another company or employer. Yet, there is no legal basis for this because of an existing non-disclosure contract between the applicant and the previous company. In the case with the school records, more requirements aside from the document signed between the one conducting the process and the applicant.

These are just few major examples of employment screening advantages and disadvantages. Getting the right information from reliable resources will help employers. Always ask for appropriate and basic requirements that shall be the basis of information that you need. Most of all, create a systematic selection process with a unique style that is effective enough to determine the candidate capacity. Sometimes, having a standard process can let the interviewee tell the whole truth. It is not making the system excruciating but rather a resourceful mean of practice in hiring. Reaching out to other companies for information is costly. Find a way to do the process right, legal, and effective.