Hireology Blog - Insights for better hiring & HR

billboard-blog.jpg

Checking a Candidate's Credit History: Pros and Cons

Posted by Anthony Perez on March 6, 2013

credit checks on new hires

Recently, legislation involving the fairness and challenging the legality of employers
running consumer credit reports has been introduced into the United State House of Representatives.  Reported on in an article by TLNT.com, the bill referred to as the Equal Employment for All Act aims to amend the Fair Credit Reporting Act or FCRA, by ensuring that credit reports are not a factor in the employment decision for any applicants.

For businesses that use credit or background checks, the mindset behind the practice is regarded as a safety measure when considering hiring someone for a position involving financial responsibilities.

Proponents of the bill argue against the ways in which credit reports can deter employers from hiring an applicant based on information that can ultimately be misconstrued.

To do or not to do

So, as a hiring manager, you've just gone through a strenuous hiring process and have narrowed it down to a candidate or two. Do you run a credit check or not? 87% of the organizations who run credit checks do so becuase the position they are hiring for deals with financial responsibilities (stats according to the 2012 SHRM survey).

Seems logical, right?

Also noted in the survey, is that of the organizations that conduct credit checks only 58% are administered once a job offer has been made, while simply 33% after an interview.  With this is in mind, the question at hand is do you run a credit check or not.  Many would consider these numbers as indicative of a strong yes, but there are other things to consider.

Keep in mind

Those in favor of running credit checks argue that the current legislation of the FCRA protects applicants from employers misusing any information, based on employers having to be completely transparent when running such a report on an individual.

Most credit checks are run in good intention, but good intention isn’t always everything.  The practice itself is declining among current employers.  Equally intriguing, is the fact that many states have already implemented laws making it illegal for employers to use credit reports in any part of the hiring decision.

Focusing on the important things

Considering a candidate’s qualifications for a position should heavily rely on more than a particular aspect of that applicant’s past.  Sure it may be an indicator of success at points in the person’s growing career, but it shouldn’t be the deciding factor.

Focusing on the candidate’s skills set or if he or she fits your company’s culture is a more valuable path to pursue when leading someone through the hiring process.  Ultimately, a potential employee’s workplace performance shouldn’t be determined by a set of numbers irrelevant to their individual capabilities.

pre employment skills testing, skills tests, sales skills tests

Anthony Perez is the Chicago brewed/early morning swimming sales & marketing intern for Hireology, a web-based selection management platform that provides customized interviews, job profiling, and one-click background checks to help you hire the right person.  Start your free trail at www.Hireology.com today!

Company Culture, How to Hire, Hireology Updates