Credit Reports Can Be An Important Element Of Background Screening
Credit reports are a critical element of the background screening process for many employers. Banking, finance, security, public safety and pharmaceuticals are just a few industries that rely heavily on credit reports for making a hiring decision as an indication of integrity and stability. Consider a candidate for a government position who has defaulted on a government backed student loan or possesses tax liens against them. What about an employee that has fiduciary responsibility over company funds, check writing authority, or access to large amounts of cash? Consider an employee that is granted a company credit card and struggles to manage their own personal credit within acceptable limits. What about an employee that has access to customer credit card information or confidential consumer information which could lead to potential identity theft? A credit report may give insight into a candidate’s stability and trustworthiness for a specific position, although there is no proven correlation to a candidate’s credit score and their ability to perform a job. For that reason, a credit score is not part of an employment credit report.
Proper use of a credit report within the hiring decision process is imperative to avoid discrimination and legal liability. Each should be reviewed on an individual basis and employers should provide a candidate/employee with an opportunity to respond to derogatory information found within their credit history, since many times there are unavoidable circumstances which lead to poor credit. Create a policy that is consistent when using credit reports as part of the screening process and be aware of restrictions within your state.
Individual States That Restrict Credit Report Use
A few states have considered, or passed, legislation that provides specific language around the use of credit reports for employment purposes. Employers need to be sure that their hiring, retention, and promotion practices fall within these guidelines. Below is a sampling of state by state considerations as of September 1, 2011. It is important that you stay current on new developments through your HR legal counsel as state and federal legislation is constantly changing.
Even with only a few states weighing in on the use of credit reports, all current, pending and even vetoed legislation address the critical need for proper use, and the valuable resource it brings to employers. EBI provides this information as awareness to current trends and issues within the background screening industry; however, this information should not be taken as legal advice as it relates to the proper use of credit reports.
Employer Resources For Consumers
The following are additional resources that provide consumers guidance with Federal law and guidelines around credit reports and their rights.
Employment Credit Reports From EBI
At EBI, we understand the critical role that credit reports play for assessing a candidate or even a current employee. EBI offers access to FCRA compliant employment credit reports in a secure and confidential manner. EBI can provide a complete picture of your candidate, confirming the candidate’s true identity, address history, and credit worthiness with our “one stop” background screening solutions.
EBI is committed to providing employers with valuable education and resources on changing legislation and cutting-edge and compliant solutions to meet federal, state, local and international mandatory requirements. If you found this information useful, select the button listed below and access more industry news, resources and tips from EBI, an NAPBS Accredited screening firm and global leader in the background screening industry!