Importance of Credit Checks in Employment

This is a normal practice that when somebody applies for a loan, the financer is indeed going to have a credit history of the applicant, but what is less known is that most companies and corporations also go for a credit check during their hiring process. When any firm decides or runs a credit check on its employee or potential-employee, this process is known as employment credit check.

Many companies today count on credit check reports to clear their mind and doubts about incoming-workers whether he is responsible or not? A credit check report will clearly informs about financial history of an applicant.

It should not be turned out as surprise to any applicant that if a company decides to run a credit check on him as the importance of the job may demand for it, for example when it involves the finance.  The position in finance requires trust, so if someone is already involved in financial fraud or money-related-malpractices then how could any company trust him hiring on that post.

The company has the sole right to get the credit check report on an employee before getting him on board or offer him job. There isn’t any law that forbids an employer not to have a credit check on their employee or potential workers or does any law exists that disallows discrimination based on the findings in the credit-check-report.

A credit check report usually includes the following information about the applicant including; the name, date of birth, address, and marital status, name of spouse, current employer, bankruptcy and current financial status.

The Fair Credit Reporting Act clearly spells out that a company can get a credit report on its employees, but he must be informed first that company is going to have a credit check on him and for that the potential workers has to give his written consent.  Without having a written permission from the workers, companies is not allowed to go on with credit check, but on the other hand, it also means that that employee would not be able to get or keep the job either.

According to the Act, company is also required to inform the employee about the disclosure before going ahead with any decision based on the report. After informing him about the disclosure, the company should then provide the workers with ‘adverse-action-notice’, detailing in it the complete name and address of the company – the employer got the report from.

Actually what makes a credit report negative is your own practices with dealing with finances. If someone pays his bills on time and don’t exhaust their credit limit then their report should be positive, but if anyone is always late in paying his bills and his credit limit exceeds his debit account then his report surely turned out to be negative.

It is not full of twists and turns how it works, but it is always hard to cut your coat according to your cloth and to live by his limited means. Spending too much, without thinking about the ample income to balance it will put on the red-zone in the red. Don’t take it lightly; it will decide your future credit plans, your employment chances and many other things hinge on your sound financial history.