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Credit Report

A credit report that is used for employment background check purposes is similar to a personal report with some minor changes. In short, this type of check takes place when a potential employer checks the credit history of an applicant to see how they have handled debt in the past. A pre-employment credit report ensures that the applicant is responsible enough to work for your business and is not a financial burden.

How Does an Employment Credit Report Work?

First, the information is received through an online connection with a national credit bureau. After this is done, the credit bureau will the verify the social security information through the data collected on the applicant. The results will specifically look at histories of:

  • Bankruptcies
  • Judgments
  • Foreclosures
  • Collection items
  • Minimum and maximum range of credit reported from the credit accounts the person holds

Why Should a Company Run a Credit Report?

It’s normal practice for a business to credit check a variety of their employees. Some employers utilize a credit deep dive, not only to verify that an applicant is responsible and reliable, but also to confirm credit history.  Additionally, a Social Security Number Trace is typically run in conjunction with a credit report and provides the opportunity to cross check names as well as previous history in the job application for possible inconsistencies. By running both a pre-employment credit report as well as a social security number trace you can verify a candidate is financially responsible and who they say they are.

The Legal Breakdown

The Fair Credit Reporting Act (FCRA) states that certain account information must be removed from the employee’s report before it can be used in order to protect the personal financial information of the applicant. Due to this being a more in-depth report, there are a few rules that are in place, such as:

  • The employer must have written permission to do this type of background check
  • The potential hire must also receive a copy of the consumer report used to make the final decision
  • They are then allowed to explain or dispute any information
  • Location-dependent laws that protect bankruptcy information

Background Search CheckmarkThe Key Takeaways

  • This report checks the credit history of an applicant to see how they have handled debt in the past
  • An employer must determine that there is a sound business reason to obtain this type of check in the first place
  • The check itself will require a social security number, name, and address
  • Employment credit checks are purely for educational purposes and cannot be used against you in a hiring decision

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