Due to the Fair Credit Reporting Act, employers are permitted to acquire a consumer report surrounding the credit history of an applicant or current employee under a number of circumstances. As noted in a report by the SHRM, these permitting reasons are found in the “[evaluation of] a consumer for employment, promotion, reassignment or retention.”
In a survey by the SHRM, 34% of organizations “conduct background credit checks on select job candidates” in their pursuit of a qualified applicant.
The primary reason for conducting a background check tends to point at a desire “to decrease/prevent theft and embezzlement (45%).” However, 19% report using it “to assess the overall trustworthiness of the job candidate.”
Despite the amount of organizations surveyed who do utilize background credit checks, it is worth recognizing that an applicant was often still hired, despite having a poor credit record (80%).
This 80% is high, especially given the fact that these companies are filling sensitive positions in their organizations. The SHRM notes that “87% conduct credit checks on candidates applying for positions with financial responsibilities, 42% on candidates applying for senior executive positions, and 34% … for positions with access to highly confidential employee information.”
This high rate of acceptance is certainly due to other factors examined in the hiring process (previous experience, skills, and education). This is great. But how far should a business leader go in overlooking the history of an otherwise qualified applicant when it can mean putting their company at risk?
