Why Are Companies Doing Credit Checks Before Hiring?

Odds are you’ve heard or read that many companies run credit checks on job applicants. It’s true. A 2010 survey conducted by the Society for Human Resource Management showed that 60 percent of employers look at the credit reports of some or all job applicants. You’ll improve your chances of getting a job once you know why employers are digging down into your credit history to see just what kind of person you are.

Screening Strategy

The Society for Human Resource Management survey found that employers generally don’t consideryour credit report alone sufficient reason to make a decision about hiring you. Rather, checking your credit is a screening strategy. While good or bad credit is a factor, other things are more important. Some companies may be influenced by promotional efforts by credit reporting agencies like TransUnion and Experian. These credit reporting agencies market credit reports to employers as a tool to weed out undesirable job applicants.

Loss Prevention

Companies are quite reasonably concerned with minimizing employee theft. Put simply, many businesspeople believe screening job applicants based on credit histories is a way to reduce losses from pilfering or embezzlement. Naturally enough, a potential employer is most likely to check your credit if you are applying for jobs like cashier, bank teller, accountant or financial officer. These are all jobs in which you have access to money or property, so companies do everything they can to insure you are trustworthy before they hand your the keys to their stash of cash.

Job Performance

Companies want to hire productive employees. Some employers think if you have credit problems you're more likely to be preoccupied with financial worries and consequently will be less productive. Other employers view good credit management as a sign you're responsible, conscientious and able to exercise good judgment.

Help Yourself

People can end up with negative information on their credit reports, sometimes through no fault of their own. If you are in the job market, take the time to get a copy of your credit report and go over it. If you find errors, contact the credit reporting agencies and have the mistakes corrected. You can get free copies of your credit reports each year through AnnualCreditReprot.com, the centralized locus of the three credit reporting agencies. Your credit report can also help you identify any real problems you might have so you can start fixing them.


About the Author

Based in Atlanta, Georgia, W D Adkins has been writing professionally since 2008. He writes about business, personal finance and careers. Adkins holds master's degrees in history and sociology from Georgia State University. He became a member of the Society of Professional Journalists in 2009.