Throughout recruitment, agencies and employers often conduct a variety of checks as part of the background screening
process when hiring a new employee or considering a candidate for a new position within a company. These pre-employment screenings help employers weed out unqualified candidates or find those applicants with significant marks against their character.
Often, as part of these screenings, employers and recruitment agencies perform a credit check on an employee before continuing with the hiring process. Last year, 13 percent of companies that participated in survey conducted by the Society for Human Resource Management reported they checked credit reports
of all candidates and 47 percent reported that they checked some candidates' credit, Fox Business reported. While these are legal to perform in most states, there is a limit to what can be seen when conducting a pre-employment screening
, according to the source. "Contrary to popular belief, employers can only see your credit report, not your credit score," Susan Johnston wrote for the source. "Credit reporting agencies do not provide your credit score to employers as part of the pre-employment screening process." When applying to a position where background and credit checks are conducted, an employer is required to receive an applicant's consent before going forward with the procedure. Especially after a recent lawsuit resulted in a $5.9 million settlement after an employer did not disclose that pre-employment screening and background checks
would be conducted, most agencies are particularly cautious to ensure applicants are aware of the process. Although most employers are privy to pre-employment screening, they will often let an applicant explain. According to the Society for Human Resource Management's survey, 65 percent of employers let candidates detail their poor credit reports before turning them down. An executive at the National Foundation for Credit Counseling advises applicants to be honest and describe any "financial hiccup" and the respective plans to pull oneself out of it. Additionally, it is possible for a person to contact a credit bureau and submit a brief explanation that will accompany their credit report, in which they could explain a debt. However, it is up to the employing firm's discretion as to whether they opt to hire a candidate. If, for example, a person was thousands of dollars in debt due to gambling, as was outlined in the Fox Business article, many firms may opt to hire another candidate who posed less of a risk.