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Why are Credit Checks Sometimes Part of Background Checks?

There are many things that go into a comprehensive background check. Oftentimes a credit check will be part of the pre-employment screening process.

Why a credit check? There are many possible reasons. It’s important to understand what the background check will entail. Potential employers can only check your credit if you give them documented permission to do so. You must also be notified in writing that the potential employer is seeking your permission to allow for a credit check.

What are potential employers looking for in a credit check? Perhaps liens or bankruptcy/foreclosure issues.

None of this means that less-than stellar credit will disqualify you from a potential job. Beyond that, the job you are applying for may make a credit check very relevant.

Banks, brokerage houses and other financial institutions are certainly going to want to look at credit ratings before making any hiring decision. The same may be true for some government jobs. Credit history can be an important way to evaluate someone who is under consideration for a job that involves accounting and money management. This is looked at as protection against fraud or embezzlement.

When it comes to background checks, it’s important to know your rights. Be aware of the Fair Credit Reporting Act.

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Tanya Borshov, Manager of Talent Acquisition and Retention
JFSA

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