Why You Should Use a Credit Report to Screen Your Employees
Aug 06, 2019 MicroBilt News
A credit report may seem like a controversial way to screen both current and potential employees. However, there are significant reasons why a B2B employer should look beyond the drawbacks to the inherent advantages of this tool. A background check can't tell you the true character of the person standing in front of you during an interview, but it can tell you something about how they made important decisions in the past.
Microbilt has been helping employers narrow down their search for years by providing updated and accurate information. Learn more about why employers use a credit check as part of a comprehensive background screening, and how current and future laws may affect this process.
Liability and Risks
Hiring the wrong person for a position is an expensive mistake that can backfire in more ways than one. Apart from the financial resources and time invested in a new hire, employers also have to be on the lookout for any wrongdoing that may occur under their noses. In 2016, the average loss for a company impacted by theft was $1.13 million.
From financial mismanagement to outright theft, it can be difficult to predict how your employees will act over time. If they feel slighted by the company or see an opportunity, it may not take much to push them over the edge. It's all too easy for an employee to take advantage of their position — especially if they have full access to the company's financial accounts.
Going Deeper
How you screen your employees will largely depend on everything from the size of your organization to the regulations of your industry. Certain positions, including financial and high-security jobs, will likely always require a credit report. A credit check is a way to learn more about a person's past and an indicator of how they've handled complicated financial decisions. Microbilt provides you with an easy way to search the US Federal Bankruptcy courts across the US (plus Puerto Rico and Guam). Our bankruptcy search is updated by the day, so you never miss out on new information.
Government Affairs
Some officials believe that credit checks can be damaging to a candidate's future. In July 2019, Financial Services Committee of the U.S. House of Representatives proposed an act that would severely restrict credit report screening for employers, though it should be noted that this legislation is extremely unlikely to pass.
Some states already limit an employer's ability to run background checks, including California, Nevada, Colorado, and Illinois. Currently, job candidates have the right to bring a lawsuit against their potential employers under the Fair Credit Reporting Act if they feel they were unfairly treated.
Credit reports should never be the sole basis of any employer's decision, but for many positions, they can provide meaningful insight into a potential employee's lifestyle and values. Microbilt encourages all B2B clients to run a number of checks, including criminal, driver's license, and education, to verify the candidate's good standing in their community.