Background Checks

Why Is A Background Credit Check Important For Employers To Evaluate Potential Employees?

40% of the resumes have false information, says a finding of a recent report. If a company hires 100 employees and 40 of them are dishonest about their facts, the company could be in big trouble. Questions about the candidate's job interests and job skills may be sorted out in an interview, but questions about credit worthiness are generally not. A background credit check provides the employers with a report which provides them with a true picture of the candidate's credit worthiness.

The practice of checking one's credit history was common in banks, lending companies or agencies. Background credit checks have found their place in the list of pre-employment check mechanisms for most of the companies that handle financial accounts.

Why would a company want to judge an employee's credit worthiness?

• They would not wish to hire a candidate who has tremendous financial liabilities. Most of these companies feel that it would be these candidates who eventually participate in fraudulent activities relating to the company's account book.
• If a candidate has defaulted in his credit payments, how can the company trust him if they select him to join them?

Bottom-line, it is all about trusting the candidates based on his credit-worthiness. Maybe, the company's rules (especially in Banking and Finance sectors) do not allow them to hire a candidate with a bad credit history. And in such cases, even candidates who have excellent skills for the job but a bad credit rating, may miss the bus.

It is important for you to know that unless you authorize the company, they cannot do a background credit check on you. Your credit rating is your personal information and it is entirely your decision whether you want someone else to access your records.

What do companies get by doing a background credit check?

Typically, companies do a background credit check by one of the below mentioned ways:

• Companies can have the option of affiliating themselves with Credit Bureau. This allows them to get credit reports based on their needs. Most of the companies who are very sensitive to their employees' credit standings take this method of doing background credit checks.
• Companies can ask a 3rd party agency to do the credit check. The 3rd party has its own standardized mechanisms and tools by which they provide the employing company with a detailed credit check report of the candidate.

The employing company is provided with a report which details the credit history of the candidate. In some cases, the agencies which do the credit check of the candidate also provide their recommendations to the employer.

Little did I know that by me not paying my credit card bills regularly, I could damage my credit rating and hence my chances of securing a good job with a good company may reduce. Simple, be diligent, keep your credit rating up and your dream-job is yours.