Credit checks for employment: 3 ways they can be more affordable

While you may associate background checks with criminal and civil records, you may not associate them with employees’ credit. Credit checks let employers screen potential hires’ credit history, past employment, insurance, outstanding balances, loans, missed payments and bankruptcies. According to a report, 16% of businesses conduct credit checks on all their job candidates. One third of companies credit-check some of their candidates. 

Credit checks can verify a candidate’s identity and help prevent theft or embezzlement. They can also help employers compare the candidate’s past employers with their resume. Overall, a credit check for employment can help businesses determine if a potential employee handles their money responsibly. But can credit checks help employers save money? 

3 ways credit checks can help employers save money 

Credit checks for employment can help give companies peace of mind. One of the most significant benefits of credit checks is that they can help save thousands in the long run. Monetary benefits of credit checks include: 

  1. Reducing fraud and theft — Companies can lose significant revenue through internal fraud and theft. The proof is in the numbers: A bad hire can cost a company more than 30% of the employee’s earnings. In addition, $32 million in cash and stolen goods were recovered from over 26,000 dishonest employees in 2020. Checking potential employees’ credit histories can be a preventive step that saves employers lots of money in the long run.
  2. Preventing turnover costs — A credit check can help employers answer a big question: Will this potential employee take their job and finances seriously? Credit checks can help employees understand if a potential employee can be responsible and committed to their position. In the long run, a committed employee might stay in their company longer, mitigating costs of turnover. A study revealed that turnover costs can be as much as 150% of an employee’s annual salary.
  3. Avoiding negligent hiring lawsuits — A company can be sued for hiring someone who harms other employees, especially if the company could have prevented it. A simple credit check can help a company take all possible precautions to avoid a negligent hire suit. This is because a credit check for employment can reveal more about a potential employee than a general background check can. Meanwhile, the company is covering all of its bases, helping to prevent the possibility of lawsuits. 

Seeking credit check screening services for your business? The Background Experts team is here to help!

Doing credit checks for employment can be frustrating and time consuming. Fortunately, our Background Experts team can take this task off your hands. Our team members have 30 years of combined experience in performing employee background screenings, and we’re fully FCRA certified. We also offer a wide range of screening services that can help HR managers and hiring agents ensure that their potential employees are fully vetted and ready to get to work. 

Contact our team today for more information about our services or to talk to one of our background screening experts.