Why do some companies request credit reports?
Many businesses are requesting credit report authorizations from their applicants as part of their screening process for employment. According to the Federal Fair Credit Reporting Act (FCRA), the applicant must give the employer authorization in order for the employer to receive a copy of the credit report. (Rosen, 2000). Credit reports are requested by some companies to review and verify information regarding the applicant such as one’s identity, the amount of debt and also to help them to determine if one is qualified for the job. In addition the credit report contains a variety of personal information for example one’s first and last name, the social security number, current and past addresses, one’s bill payment history – if one is current or delinquent and also one’s amount of debt. ( Experian Information Solutions, Inc., 2005) . Additionally companies particularly request a credit report authorization from the applicants who will be working in a position that will require them to handle cash for instance a bookkeeper. (Rosen, 2000). Also a credit report may also be requested by some businesses when one is up for a promotion. (FTC Facts for Business, 1999). Generally companies requesting credit reports for their applicants from either of the main three credit reporting agencies, they furnish a report with restricted data. The report excludes information such as “date of birth, marital status, and credit card account numbers”. ( Experian Information Solutions, Inc., 2005).
However the credit report provides more detailed data than the job application. The credit report contains data regarding amount of credit accounts one has, type of account and the amount of the monthly payments for each account. It also has the date the account or accounts were opened, public information about legal matters for instance bankruptcies and federal or state tax liens and also the payment history, if one is current or delinquent. ( Experian Information Solutions, Inc., 2005). On the other hand the information being reviewed can help give the employer a general idea regarding the personality of the applicant for example if they are one who do or do not take care of their personal responsibilities by paying their bills and paying the bills when they are due. Also some of the information on the credit report can prove if the applicant has too many financial obligations, that will possibly disturb their job responsibilities and they do not want to risk hiring an applicant whom might steal from their company. ( Experian Information Solutions, Inc., 2005). Another worry for some businesses is they do not want to hire an applicant who cannot handle their personal obligations. (Rosen, 2000).
Meanwhile if a...