Checking the credit of job applicants has been a subject of controversy for many years. However, there are valid reasons an employer may want to do a credit check. Consider these three reasons to do a credit check when making your hiring decisions.
1. Ability To Manage Money
If an employee is going to be managing your money, it can be a good idea to see how well they have managed their own money. Credit check services for employers can give employers a good idea of whether the applicant they are considering has a history of making bad financial decisions. While some people may do a better job of managing their employer’s money than their own, all else being equal, it may be a wiser decision to choose an applicant who has demonstrated good decision-making skills with their finances.
2. Risk for Criminal Activity
Not everyone who has a lot of debt is a risk, but applicants who are overwhelmed by debt may be more tempted to steal from their employer. A credit report will reveal applicants who are carrying excessive amounts of debt compared to their current or expected income.
3. Verify Reported Salary
If you are skeptical about the amount of money an applicant claims to have made in their past jobs, a credit report can be helpful. If the applicant claims to have been making a generous salary for the past ten years, but their credit report shows a history of late and missed payments or other financial trouble, that may be a sign that the applicant has not been truthful.
The fairness of using credit history to determine whether to hire a job applicant is a subject of much dispute. However, subject to your state’s restrictions, a credit check can reveal valuable information about potential employees.