Credit checks are a common boogeyman of the hiring process. Many recruits see a review of their credit history as an invasion of privacy. Still others wonder why a credit check is needed in the first place and how it really impacts their ability to do their jobs.
If you’re a recruiter, it’s important to understand why credit checks matter, as well as when they are beneficial compared to when they are unnecessary or even harmful.
It’s also wise to consider the impact that credit checks can have on finding and hiring the best candidate for a position.
Below are some questions that help to highlight both the pros and cons that come with including a candidate’s financial history in the hiring process.
What Should You Look for in a Credit Check?
One of the first questions that should be asked is what you’re actually looking for when you conduct a credit check. After all, you’re not interested in what local bank the candidate opted to use. Typically, credit checks allow employers to see things like:
- A candidate’s ability or inability to handle their money.
- Whether or not they can make major financial decisions like making payments on time.
- How they have managed one of life’s biggest responsibilities.
- Links between derogatory marks and potential criminal behavior.
There are quite a few factors that a credit check can quietly reveal about a candidate.
What Are the Benefits of a Credit Check?
The natural follow-up question to what employers are looking for is what benefit they’re getting from conducting a credit history check or reviewing a candidate’s credit score. Going off of the previous list of factors, the benefits of a credit check help an employer gauge the following:
- Whether an employee can handle the company’s money as part of their professional responsibilities.
- If they can be trusted to execute important tasks correctly and promptly.
- Knowing if they have either good credit that reflects a track record of being a responsible individual or fair to poor credit that highlights an ongoing struggle to come through on financial commitments.
- If they have any unsavory background behavior that should be noted before a decision is made whether or not to hire them.
While they may seem unrelated, a recruit’s financial and professional track record are often — though not always — closely aligned. Checking a prospect’s credit can help you know exactly who you’re hiring.
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