Must Know: Why Does Employer Asks For Credit Report

It is being seen that an increasing number of employers are running credit checks on the applicants. The rationale is that the credit score of the applicant can reveal a lot about the financial responsibility of the applicant. The company usually prefer applicants with a good credit score since these are the individuals who are more likely to manage the finances of the company more prudently. Surely, this rationale has not yet validated scientifically but still, companies like to do it and thus it becomes essential to know several facts about it.

You can now get a special credit report that is meant just for employers. This form employers credit report contain all forms of information found in regular credit report with the exception of account numbers, birth date, and/or any reference to your spouse. In this manner, the employers get what they want and the employee does not have to share any sort of personal information. On the other hand, these reports will not be completely devoid of personal information; they contain some basic personal information like your residential address, history of liens and bankruptcies, and your credit history.

Most companies do not do credit check till the applicant reaches the final stages of the selection procedure. Also, most of the companies are interested in a credit history of past two to seven years.

As alluded earlier, credit score check is done to assess the financial honesty and personal integrity of the person. Both these qualities are extremely necessary for posts that are sensitive and mainly the industries that require handling of sensitive information do credit checks. Some of the industries that most utilize credit reports are defence, pharmaceutical, chemical, financial services, and so on.

There are many confused employers who are pretty confused about this credit business and often end up asking credit score. No government agency has given the permission that enables the employers to ask for a credit score; an employer can simply ask for credit report. Different states have different rules regarding how much information the employer can demand from you. The employer is required to give you a written notification and ask for your written approval before checking your credit report.

Once you have given your permission to access your credit report, the employer is not bound to seek your clarification on any of the issues seen in your report. The credit reporting agencies, however, prompt the employers to ask clarification from the concerned applicant.

Crif is a credit information bureau in India that caters to the need of borrowers from different segments ranging from MSME to microfinance borrowers. It has built the world's largest Microfinance Bureau Database.