47% of Employers Use Credit Checks When Making a Hiring Decision

47% of Employers Use Credit Checks When Making a Hiring Decision
Laura Slawny
By: Laura Slawny
Posted: August 12, 2013
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Looking for a new job can be exciting, what with a new career, better hours and a bigger paycheck. It may be just what you need to finally get ahead!

But many workers never take the first step because they are afraid their financial mistakes will hold them back.

Don’t let the fear of a credit background check stop you from moving forward. A recent survey shows fewer companies are conducting credit checks on job candidates.

In 2012, only 13 percent of companies surveyed ran credit checks on all candidates and 34 percent only ran checks on select candidates.

That leaves 53 percent of companies surveyed that say they do not run credit checks on any potential hires.

When it comes to deciding whose credit will be checked, human resource professionals surveyed by The Society for Human Resource Management say it’s not about the applicant.

They run credit checks based on the responsibilities that come with the job.

  • 87 percent for jobs with financial responsibilities
  • 42 percent for senior executive positions
  • 34 percent for jobs with access to confidential employee information

“Thirteen percent of companies ran credit checks on all

candidates and 34 percent on select candidates.”

Candidates that are least likely to get a credit check include those applying for jobs in  homeland security, working with children or the elderly and health care workers with access to drugs.

Most human resource professionals surveyed say they run credit checks for between two to six years, mostly to prevent embezzlement and reduce their liability.

But most of them don’t let foreclosures, old student loan debt or tax liens keep them from hiring someone. Less than 20 percent said bankruptcy or high debt-to-income ratio would make them reconsider a candidate.

The biggest thing human resource is looking for is collection agencies – regardless of the job.

When human resource professionals see collection agencies and current outstanding judgements on an applicant’s credit history, they are most likely to reconsider if they want to hire you.

Just because you have a few dings on your report, there’s no need to panic. Most human resource professionals aren’t looking to target your mistakes.

In fact, the Fair Credit Reporting Act prohibits them from running a credit check without getting your written approval first. That goes for current employees who are going for a promotion or reassignment.

Surveyed members of The Society for Human Resource Management say they really just want to find the best person for the job with the closest work experience.

  • 58 percent don’t run the credit check until after they make a contingent job offer.
  • 64 percent allow candidates to explain the results of the credit report.
  • 80 percent still hired a candidate who had a negative credit history.

If your employer wants to see your credit history, you can refuse. However, it may hurt your chances of getting the job.

Instead, why not get a free copy of your report at annualcreditreport.com and see what’s on there. That way, you will be prepared to explain if they have any questions.

Source: shrm.org. Photo source: turner.com.