When hiring new employees, it can be beneficial to Credit Check Reports of your potential employees, as part of your background check. In some industries and companies, checking credit reports is often required for employees who have positions of fiscal responsibility, either directly with your company, or with privileged information of your customers. Checking credit reports can give you peace of mind in trusting those applicants/employees with financial-based employment positions.
Cutting Edge Background Investigations provides employment-purpose credit reports that deliver a profile of the subject’s financial history for the past seven years. These credit reports are “soft pulls”, meaning they won’t have an impact on credit rating and will not have a FICO score—which is not permissible to use in evaluating an applicant’s credit for job-worthiness.
Credit Check Reports include information on:
- Public records – issues that have been filed with the courts, like bankruptcies, foreclosures and tax liens
- Trade lines – revolving and installment accounts, such as credit cards, mortgages, and student loans
- Collections accounts
- Charge-offs – charges that a creditor has given up collection efforts on
- Judgments and monthly payment histories
- Federal Financial Agency Enforcements
A credit report can reveal habits such as living beyond one’s means and ownership of large debts with no immediate methods of repayment – which may be indicators of financial irresponsibility that could affect the workplace. However, employers must use caution when deciding when to use credit reports to make sure that personal financial circumstances are related to the job function or security requirements. It’s important to note that a number of states further restrict the use of credit reports for employment purposes. As a result, a consumer credit report should only be used when credit standing has a direct relationship and a demonstrated risk that is business related to the job class, role or position being sought.
Eleven states, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington have passed laws that restrict how employers can use credit reports for employment decisions.