Credit Checks and Your Candidate
Can you run a credit check on your prospective new employee? Well yes and no. Yes, the Fair Credit Reporting Act (FCRA) allows employers the ability to do a credit check. You of course have to have a signed release, from your applicant, authorizing you to pull a credit report. You must make sure you have a signed notice of intent from your applicant as well.
Now that you have the written consent and are ready, wait! Does the credit report you are about to pull on your candidate have anything to do with the job he/she will be working at? Are they going to be a bookkeeper, accounting specialist, or some other type of financial executive position or a person who has access to sensitive financial information? These are all positions which it makes sense to consider running a credit report on. Have a policy and job description in place as to which positions in the company need a credit report on the prospective applicant.
How about someone not in one of those positions? You should check with your own legal counsel, but I think not. If a person goes to work and has no access to financial records or the funds of the company, chances are you could get yourself in trouble for pulling that credit report.
Okay, now let us consider the possible repercussions of pulling a credit report on your applicant. The report shows that the applicant has a bad credit history. Do you want to be in the business of trying to evaluate the applicant on his or her financial history? What if they are married to a spouse who has no fiscal responsibility? Are you going to know if the candidate is solely responsible for that credit history? How about a serious medical problem that the family experienced? They were put into collections due to loss of a previous job, and were struggling financially to get back on their feet? Is it fair to judge a person’s character on a bad credit report? Especially if it has nothing to do with the work they will be performing?
You see there are many variables to consider when getting that credit report. So if you are going to pull the credit report, because it has to do with their job, fine. But consider asking the prospective candidate about the results on that report. You may get a clearer understanding or explanation of their financial and credit history.
Credit Report Links
- Fair Credit Reporting Act (FCRA) Summary of Your Rights:
- Consumer Financial Protection Bureau (CFPB)
- Fair Trade Commission (FTC) Victim of Identity Theft
- Equifax: Notice to Users of Consumer Reports: Obligations under the FCRA
- TransUnion: Notice to Users of Consumer Reports: Obligations under the FCRA
- Experian: Notice to Users of Consumer Reports: Obligations under the FCRA