Credit reports

We get credit reports for all employees, even those that don't have money-handling responsibilities.  I think it's a waste of time and money and would like to do away with the practice except for employees that collect/handle money.  Any problems with limiting credit checks to those applicants?

Comments

  • 8 Comments sorted by Votes Date Added
  • IMO, it's not helpful to use credit history to decide who'll be a good employee.  Lots of really smart, hardworking people never learn how to manage debt.  And it's illegal to consider bankruptcy when hiring.  Where I used to work they insisted on credit checks, but I never really used them in hiring decisions.  We had good employees with bad credit, bad employees with good credit, and everything in between.
  • There is no problem with limiting credit checks to only those that handle money.  There are some many legal things to consider when running a credit check for employment reasons that if you are running them you should ONLY do it for positions that warrant a check.  I agree with you that this practice is a waste of company time and money right now. 

  • I would agree that it's a waste, except in 1 instance - what if you hire an employee initially in a position that doesn't warrant a check, and later the employee moves into a position that does warrant one?  Just something to maybe keep in mind for current employees moving into those types of positions - which is why my previous company, a large bank, ran one on all employees regardless of position.
  • We run credit reports on our applicants applying for Sales positions for several reasons.

    1) We want to make sure they aren't in debt and will sell our products under the table.

    2) We want to see if they can manage their finances. This is an indicator of how they will manage their territory.

    3) Credit reports sometimes bring up public records such as when they sue another person/company/etc...

     If we weren't hiring for sales positions, we wouldn't bother. For us, it's worth knowing what we are hiring before investing alot of money in training, samples, company car, benefits, etc..

  • My first questions would have to be why do you run credit checks on all employees, and what kind of notice do you give your employees before running them?  Typically we run a credit report only on those employess who handle money or our IT Mangers who have the potential to manipulate internal finicial documents. 
  • One of the things I would be concerned with is whether or not you are creating an "adverse impact" in hiring.  I'm sure many statistics are available that would indicate that Women and Minorities may not have as good a credit rating and report as Men and Non-Minorities.  Just something to think about if you are a federal contractor. If someone files a complaint, are you prepared to prove that a good credit report adequately dictates success or failure on the job? 
  • I personally think credit reports are one of the most intrusive types of screening employers can do and should be limited to jobs where it is related. For instance, we get credit reports on our sales reps because they take customer information including credit cards. We also get the reports on those who handle financial transactions and cash. Otherwise, I just don't see the job-relatedness to justify the expense and intrusiveness.
  • I was wondering if there is a formula used used to determine weather or not to hire a potential employee based on information from a credit report. What are the factors?

     Thank you

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