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The use of credit checks — a once standard practice in hiring — has now become somewhat outdated, and, in many places, even illegal.
For an employer, there are many effective ways to find out if the person who walks into the interview is going to be a good fit for the job. There are the first, more obvious questions to ask: Does this person have relevant work experience? How strong is their educational background? And do they seem like they would be a good fit with other employees?
One hiring mainstay, however, used to be the consumer credit check. It makes sense, in theory — if a person has any outstanding personal debts, then they’re probably mismanaging their own money and would, therefore, mismanage a company’s. Right?
It seems as if that assumption is changing. This month, New York City actually outlawed the practice in the vast majority of hiring instances, following the lead of other major municipalities, according to PBWT.
But why? As it turns out, your credit history actually has relatively little to do with how you function as an employee, and many people are stuck with poor credit histories for reasons beyond their control.
Credit Where Credit Is Due
This trend isn’t exactly new. As early as 2012, more than half of all companies didn’t perform credit checks as part of their employee evaluations, according to a survey conducted by the Society for Human Resource Management. Only a paltry 13% actually performed a check for every position, and most concluded they had hired candidates even after finding their credit reports contained unflattering information.
According to a USA Today article on the subject, the reason that credit reports have such insignificant sway in hiring is because they hold very little weight in comparison to the criteria that actually matter to hiring managers: relevant experience, expertise at your particular job, and your ability to work well with colleagues.
Imagine this hypothetical scenario: a woman launches an entrepreneurial tech venture for which she’s had to invest a significant portion of her own capital. The business eventually goes sour for various reasons, propelling her into debt, yet she remains a thought leader in her industry and possesses an invaluable skillset.
Should that lingering debt prevent her from future employment, despite her obvious merits? The answer is a resounding no. Indeed, she needs that employment to resurface from debt.
Such is the argument being made by supporters of the NYC credit check ban, as described by the New York Times. This is especially important for low-income earners, who are the ones most frequently burdened with debt, and often at the receiving end of predatory loan practices. Most people believe that they should have the chance to work their way out.
Checks That Matter
There are important alternatives to credit checks that do reveal significant pieces of information about potential hirees. While traditional credit checks may not be worth your time, these investigations could make or break the hiring process.
For many employers, a private investigator offers the most reliable and professional way to glean information about a potential hire. Trusted firms like Integrated Security Services provide exhaustive and detailed accounts of individuals that speak volumes about their actual workplace conduct.
You’ll want to know, for example, whether a person has a tax judgement, lien, bankruptcy, criminal activity, or any other red flags that could signal potential trouble down the line.
Even though credit checks can paint an inaccurate picture of a person, Integrated does maintain the ability to conduct a credit check, if so requested by the client. There may, in fact, be certain situations when a company needs information contained in a credit report, especially when the prospective employee may be personally handling money.
That said, there is no substitute for a thorough and detailed account of an individual that provides many different, valid points of evaluation. And with Integrated Security Services, you can be confident you’ll make an informed, professional decision that’s in the very best interest of your company.
