Why Employers Do Credit and Background Checks

Background ChecksBy Beth Braccio Hering, Special to CareerBuilder

If you want to work for the senior homecare organization Visiting Angels in Ann Arbor, Mich., be prepared for a thorough background check. "I wouldn't even consider hiring an employee without one," says owner and director Angil Tarach-Ritchey.

"Employees not only need to be trusted by the employer, they are a reflection of our business," she says. "The check brings peace of mind and less risk for future problems, and I use it as an educational and marketing tool so the elderly, their families and our referral sources know that we value their safety."

Tarach-Ritchey is not alone. A variety of employers are turning to background checks as a way of ensuring applicant suitability. And while certainly not a new phenomenon, it is one that is on the rise.

"The trend toward greater use of background checks could be driven by several factors, including technological advances that make the screening process easier, faster and more economical," says Mary Massad, vice president of talent acquisition and retention strategies for Insperity Recruiting Services in Houston, Texas. "Also, there is greater awareness by employers that candidates may not always be completely honest about their background and employment histories."

According to Massad, a complete background check often includes the following:

  • Review of work history. The applicant will typically be asked to provide first and last paystubs to confirm length of employment and salaries at previous jobs.

  • Verification of Social Security information. Federal databases will help verify that a candidate is providing accurate information and has a legal right to work in the United States.

  • Criminal background check. Local criminal records, as well as those in jurisdictions where the applicant has lived during the past seven years, will reveal information about an applicant's criminal background.

  • Confirmation of education. Schools or universities listed on the applicant's résumé will be contacted to verify the applicant's attendance, degree and graduation year.

  • Review of driving record. Employers typically obtain motor vehicle records on candidates whenever a job requires driving, such as deliveries or sales calls.

Increasingly, employers also are performing credit checks. According to a survey by the Society for Human Resource Management, 47 percent of companies run credit checks before hiring for select positions, and 13 percent do so for all positions. While searches are most common for applicants who will have financial responsibility (handling cash, banking, accounting, technology), checks are becoming more commonplace for those seeking senior executive positions and for anyone who has access to highly confidential employee information, such as salaries, benefits and medical records.

So what should an applicant do when confronted with an employer who wants to run a check? Don't lie, and know ahead of time what the hirer will find.

"As far as preparing for an employer running a background check, there is very little the applicant can do. He cannot influence the outcome, so our advice is to be totally honest and up front about any criminal past and be able to articulate a reasonable story about either how it happened or what has transpired since that makes the applicant a good risk," says Dan Chaney, director of human resource advisory services at Employers Resource Association, a nonprofit serving small and medium businesses in Ohio, Kentucky and Indiana. As for a credit check, he suggests job seekers obtain a free credit report and be prepared to explain the results if necessary.

Guidance policies from the U.S. Equal Employment Opportunity Commission deter companies from discriminatory practices. Results from a criminal background check must be approached with fairness, taking into account such factors as the nature of the offense, the age of the offense and the relationship of the offense to the job. An SHRM poll reveals that the majority of employers comply with EEOC expectations.

Thus, job seekers subjected to checks should not feel that a company is attempting to dig up embarrassing dirt. Most employers are just trying to run a good business, and verifying a new employee's background can be in the organization's best interest. As Massad notes, "Few businesses boast perfect records on hiring decisions.

"Mistakes, such as blindly trusting candidates to provide honest information on their résumés or during interviews, can have long-term repercussions for employers that may include work disruption, lost revenue, low employee morale, litigation or even damage to a company's reputation. Background checks have become an essential hiring tool that can help protect a company."

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Beth Braccio Hering researches and writes about job search strategy, career management, hiring trends and workplace issues for CareerBuilder. Follow @CareerBuilder on Twitter.

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Being judged based on your credit for a job is complete bullshit! My credit was trashed because of a douche bag supervisor that had it out for me and was jealous I was friends with the receptionist he started dating.

But hey who cares about quality work anymore. It's all about how cheap you can be on paying employees as little as possible or outsourcing to other countries.

Look at our crappy ass government. They are drowning in debt. Are they having trouble getting more money or more loans? Nope. **** the system!

November 16 2013 at 11:27 PM Report abuse rate up rate down Reply

credit has nothing to do with a work ethic!!!!

August 04 2013 at 10:41 PM Report abuse rate up rate down Reply

I just filed bankruptcy from a divorce and medical bills.It has nothing to do with my work ethic.I worked at 1 company for 15 years and 6 years at the other one.I hardly ever missed work and always pulled my weight.I received many raises and bonuses in the past.I have had 3 jobs in my lifetime since age 18.not a job hopper at all.I worked when i was 14 -18 also.I am now going to school and volunteering and working.If an employer doesnt want to hire me that is their loss.everyone should start writing to lawmakers to get laws changed and filing complaints.Then maybe employers will change their tune someday!!!

August 04 2013 at 10:39 PM Report abuse rate up rate down Reply

the companies can ruin their reputation by discriminating against people with convictions for the wrong reasons also.I have complaints against a company right now for not hiring me for the wrong reasons.they face up to a $100,000 fine and lost compensation for me.It sounds pretty good that I will win.People need to stand up for themselves if they feel they are discriminated against.It is the only way companies learn the rules.

August 04 2013 at 9:49 PM Report abuse rate up rate down Reply

The problem is my credit has nothing to do with my ability to do a job but, apparently it has something to do with my ability to get a job . In that case only rich people and rich people's kids are allowed to work in this country.....I think it's time to bring down a big lawsuit on a company that does credit checks and then that put an end to it !

April 03 2013 at 9:11 PM Report abuse rate up rate down Reply

I understand credit checks to a degree, but it makes it imposible to find a job if someone was not perfect in his teens ore early twenties . My son is almost twenty and has a misdemener( spelled wrong) for something stupid he did and now he says he can't find work anywhere, even McDonalds. Really, why does McDonalds need a background check? On another note, Mexicans can just walk across the boarder and they have a job without all the background checks and any other checks employers do on you. Something is not fair and not right. I can so relate to Tom the 40 yr CEO. We were pretty much like him. It is stupid that you have to go into debt to have good credit. Personally, I would rather live within my means and not beyond them.

April 02 2013 at 10:26 PM Report abuse rate up rate down Reply

Corporate america demands our ultimate loyalty. This monster demands to know ALL of our private information ( in order to 'lower risk exposure' ). If you push back, you are gone. For all of your sacrifice, you to to be terminated whenever they choose, for ANY reason they choose. How did this happen? Courtesy of your state and federal Republican Party. They know it (and gloat about it). We know it. THe only way to sanity in this post rational era of polictics is to sweep conservatism out of the house, take the senate and executive branch, and finally make some progress. 2014. A new house of representatives.

April 02 2013 at 10:24 AM Report abuse rate up rate down Reply

I understand background checks but have a real problem with using someones credit score as an employability item. It is envasion of privacy and I think we'll see it disallowed at some point in time.

April 01 2013 at 2:28 PM Report abuse rate up rate down Reply

people suck who run backgrond checks

November 02 2011 at 9:28 PM Report abuse rate up rate down Reply
criminal records

hey now-a-days it is really necessary for us to know about the new person staying next to our home or apartment for the security reason. and now it is easy to know about any person, Here we provide you free service for criminal records check and background check...

September 17 2011 at 3:14 AM Report abuse rate up rate down Reply

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