3 red flags to look for in an employer credit check

While credit checks are not as common as background checks, they offer a deeper look into a potential employee’s financial history. Credit checks allow employers to screen their potential employees for suspicious financial activity. They can also help verify a candidate’s identity and past employment. 

The diverse information found in credit checks that employers perform can be overwhelming. It’s important for employers to know how to sift through that information and identify potential red flags. Doing so can protect businesses from future financial troubles and HR headaches. 

3 red flags employers should look for in a credit check

A potential employee’s credit history can say a lot about their ability to work for an employer. Recognizing red flags can help employers avoid future conflict and fraud-related costs. Red flags found in the results of credit checks employers do can include: 

  • Inconsistent employer history —If your candidate’s resume does not match up with the employment listed in their credit history, it can be a cause for concern. Discrepancies in employment history can be a sign that a candidate is hiding information, accidentally or intentionally. Did the candidate have multiple short-lived jobs? Did they spend more time unemployed than recorded on their resume? An investigation can be a good way for an employer to understand those discrepancies. It can also be a good opportunity for employers to get to know their candidate better. 
  • Poor credit history — Outstanding loans and late payments are not necessarily indicative of a candidate’s poor character. Unforeseen life events can complicate finances. However, a pattern of late payments and poor credit history can be concerning, especially if the candidate is applying for a position in finance, like accounting. Asking clarification questions can help employers better understand the context behind the numbers. It can also help them deduce if this candidate is responsible enough for the job. 
  • Bankruptcy or foreclosure — A potential employee could have filed bankruptcy to get a fresh start on their finances and get back on track. They may feel more confident to work without debilitating debts on their shoulders. In fact, it’s possible that the candidate will be upfront about their bankruptcy ahead of the employer credit check. However, if the candidate seems to dodge questions or tries to hide their financial past, it can be indicative of a deeper issue. It’s a good idea for the employer to ask meaningful questions and be aware of how the candidate responds. 

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

Having to do credit checks can be frustrating and time consuming as an employer. 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.