Why Do Businesses Run an Employee's Credit Report?
As of 2011, 60 percent of U.S. companies run credit checks on some of their job applicants, according to the Society for Human Resource Management. This has increased 18 percent since 2006. Employers have many different reasons that they might want to run a credit check on a potential job applicant, but they must follow legal guidelines if they choose to do so.
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Sensitive Positions
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Employers are more likely to run credit reports on a potential job applicant for sensitive positions, and they may also run the reports on people that they have already hired in these positions. Sensitive positions include jobs that handle cash or customer accounts, as well as upper management positions. In fact, an employer is likely to run a credit report for any accounting job. The common belief is that if a person has bad credit or owes a lot of money on bills, he is more likely to steal money from the company.
Impact to the Bottom Line
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A person's credit can impact the bottom line of the company. Bad credit indicates potential financial problems, and financial problems can increase a person's stress level. This can cause an increase in absenteeism, due to personal stress harming a person's immune system. The stress can also reduce productivity in the job as well.
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Character
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Some employers believe that a person's good credit is a sign of good character. People who pay their bills on time think that it is important to keep their word and promises, and this is a good quality to have as an employee. Conversely, if you have bad credit in your past, but you current finances are positive, it can show that you are a person of strong character who has risen above adversity to overcome your problems.
Legal Matters
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If your present or potential employer wants to check into your credit report, they need to have your permission to do so. Also, according to the Fair Credit Reporting Act, an employer can not base their hiring decision solely on information in your credit report, but it can be considered along with other available information. Also, while negative credit can be used against you when applying for a job, a bankruptcy cannot, according to federal law. Title 11 of the United States code prohibits this. If an employer tells you that they are not hiring you or they are firing you strictly because you filed for bankruptcy, you may want to consider filing a lawsuit.
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