Why do some employers request credit reports?
Many employers 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 employers to review and verify information about the applicant such as, his/her identity, the amount of debt and also to help them to determine if one is qualified for the job. The credit report contains a variety of personal information for example, ones first and last name, the social security number, current and past addresses, ones bill payment history – if one is current or delinquent and also ones amount of debt. ( Experian Information Solutions, Inc., 2005) . Employers 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). A credit report may also be requested by some employers when one is up for a promotion. (FTC Facts for Business, 1999). When employers request 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).
The information on the credit report is used by some employers to confirm information regarding the applicant. The information is,
1. The identity of the applicant.
2. If the applicant is dependable and trustworthy.
3. If the debt amount is too large for the salary the job is paying.
4. The bill payment history, if one is current or delinquent.
The information being reviewed can help give the employer and idea regarding the personality of the applicant, if he/she is one who do or do not take care of their personal responsibilities by paying his/her 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 companies is they do not want to hire an applicant who cannot handle their personal obligations. (Rosen, 2000).
If a company decides to use any of the information obtained from the credit report to make a decision to deny the applicant for employment, they are required to provide the applicant a “pre-adverse action disclosure notice” and a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act” a...