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Background Checking: Conducting Credit Background Checks. January 22, 2010. Introduction. Overview of Credit Background Checks

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Introduction
Introduction

Overview of Credit Background Checks

  • Many employers conduct some kind of background check on job applicants and/or employees. Background checks may include verification of educational or professional history, contacting references, obtaining a report on an individual’s criminal history, and/or obtaining a report on an individual’s credit history.

  • The Fair Credit Reporting Act (FCRA) authorizes employers to obtain a consumer report for “employment purposes” from a consumer reporting agency (CRA) so long as certain disclosure requirements are met. The term “employment purposes,” means a report that is used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.

  • For some employers, credit payment records serve as a factor in evaluating an individual’s suitability for a job, while others seek information on driving records, criminal histories, or other background information. All of these types of reports are considered consumer reports if they are obtained from a CRA.

  • Before procuring a consumer report, FCRA requires employers to clearly disclose, in writing, that a report may be obtained for employment purposes and get written authorization from the individual. FCRA also requires that the employer provide the individual with a copy of the report and a written description of the consumer’s rights before taking any adverse action based in whole or in part on the report.

  • The Federal Trade Commission website has additional information on the rights and duties imposed by the Fair Credit Reporting Act at (www.ftc.gov/os/statutes/fcradoc.pdf)


Does your organization, or an agency hired by your organization, conduct credit background checksfor any job candidates by reviewing the candidates’ consumer reports?

Note: n = 343


When conducting organization, conduct credit background checks on job candidates, in general, how many years of credit history does your organization check by job level?

Note: n = 45. The data in this table represent organizations that conduct credit background checks on all job candidates. Respondents were asked to round up to the highest year.


On which categories of job candidates does your organization conduct credit background checks
On which categories of job candidates does your organization conduct credit background checks?

Note: n = 158 .The data in this figure represent organizations that conduct credit background checks on select job candidates. Percentages do not total to 100% as respondents were allowed multiple choices.


When conducting conduct credit background checks on job candidates, in general, how many years of credit history does your organization check?

Note: n = 4-138. The data in this table represent organizations that conduct credit background checks on select job candidates. Data sorted by the 6–7 years column.Respondents were asked to round up to the highest year.


In general, if a conduct credit background check revealed information that presented the job candidate’s financial situation negatively, what types of information are MOST likely to affect your decision to NOT extend a job offer?

Note: n = 201. Percentages do not total to 100% as respondents were allowed multiple choices. Respondents were asked to select their top two options.


When does your organization, or any agency hired by your organization, initiate credit background checks on job candidates?

Note: n = 199


Does your organization allow job candidates, in certain circumstances, the opportunity to explain the results (e.g., high debt, bankruptcy, etc.) of their consumer report that might have an adverse effect on an employment decision?

Note: n = 197


What is the circumstances, the opportunity to explain the results (e.g., high debt, bankruptcy, etc.) of their primary reason that your organization conducts credit background checkson job candidates?

Note: n = 195


Demographics organization industry
Demographics: Organization Industry circumstances, the opportunity to explain the results (e.g., high debt, bankruptcy, etc.) of their

Note: n=312. Percentages may not total 100% due to rounding.


Demographics organization industry continued
Demographics: Organization Industry (continued) circumstances, the opportunity to explain the results (e.g., high debt, bankruptcy, etc.) of their

Note: n=312. Percentages may not total 100% due to rounding.


Demographics organization sector
Demographics: Organization Sector circumstances, the opportunity to explain the results (e.g., high debt, bankruptcy, etc.) of their

Note: n = 319. Percentages may not total 100% due to rounding


Demographics organization staff size
Demographics: Organization Staff Size circumstances, the opportunity to explain the results (e.g., high debt, bankruptcy, etc.) of their

Note: n = 312. Percentages may not total 100% due to rounding


Demographics organization region
Demographics: Organization Region circumstances, the opportunity to explain the results (e.g., high debt, bankruptcy, etc.) of their

Note: n = 312. Percentages may not total 100% due to rounding


Demographics organization operations location
Demographics: Organization Operations Location circumstances, the opportunity to explain the results (e.g., high debt, bankruptcy, etc.) of their

Note: n = 315 Percentages may not total 100% due to rounding


Background checking conducting credit background checks1
Background Checking: Conducting Credit Background Checks circumstances, the opportunity to explain the results (e.g., high debt, bankruptcy, etc.) of their

Methodology

  • Response rate = 19%

  • Sample comprised of 433 randomly selected HR professionals from SHRM’s membership

  • Margin of error is +/- 5

  • Survey fielded November 18 – December 4, 2009


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