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Why do employers check credit?

New York City’s decision to ban all employment credit checks this past spring, we thought it would be a good idea to revisit that question: Why DO employers check credit scores for potential employees, and what information do they get when they pull a credit report? First of all, when an employer pulls a credit report, they don’t actually see an individual’s credit score. Instead, they are provided with a sheet of information called the credit report, which includes names the candidate has gone by, addresses, and information about their credit history, including bankruptcies and whether or not they have previously made payments on time. Pulling this report will not ding an applicants’ credit, but employers do have a few responsibilities to the potential employee. Businesses should be cautious and work with a background screening company to make sure they are not in violation of any state or federal laws before beginning the screening process. There are two big reasons that employers might want to check a job applicant’s credit report: 1) To determine if the person is a good fit for the job he or she is applying for. This is especially true if your applicant is considering a position in which he or she will have access to company finances, financial records, company credit cards, or other insider financial information. Employers might run a credit report to make sure that an applicant’s credit history does not indicate that there may be concerns with the applicant taking on this kind of role, so as to protect the company from financial fraud or embezzlement. 2) To verify past employment. One thing that is not commonly known about a credit report is that it can sometimes contain a candidate’s previous work history, including company names and addresses. This is a great way for companies to review an applicant’s past jobs and confirm that the applicant is not committing resume fraud by lying about previous experience, especially if conducted early in the process (well before reference checks would be considered). For more information about why employers might conduct credit checks, or to learn what information you’d have access to with a credit check, contact Mind Your Business.]]>

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