Are pre-employment credit checks relevant?

© Illia Uriadnikov – 123RF.com

“It most certainly is for positions of trust and employees who work with finances and cash,” says Rudi Kruger, general manager of LexisNexis Governance, Risk and Compliance Division – provider of the RefCheck Advanced background screening solution.

Data from RefCheck Advanced showed that 62% of all credit report checks performed in 2015 returned a positive result, meaning screened candidates’ credit reports carried adverse credit information.

While it may be argued that information from a candidate’s credit report has little to do with their skills and capabilities in the workplace, there are still some valuable takeaways gleaned from conducting credit checks on candidates who are expected to work in financial roles.

“Finance departments form part of the company’s operational core. It is where a wide range of critical responsibilities, including bookkeeping, cash flow and budgeting, are managed. In order for employees to capably and effectively manage the associated tasks, it is important for them to have a healthy relationship with money,” said Kruger.

Within organisations like banks, financial institutes, brokerages and credit providers, the relevance is heightened since fraud and theft is often a huge risk. “These organisations require honest and responsible employees, who represent minimal threats to the organisation’s well-being.”

When screening produces adverse information on a candidate, further scrutiny is recommended.

“There are several plausible reasons as to why a person may have adverse credit information on their profile. These include unexpected expenses like medical emergencies, legal battles or other unforeseen circumstances – which can happen to anyone at any time. Decisions regarding whether to offer employment should therefore not rest solely on adverse information when there’s a legitimate explanation available,” Kruger advised.

“Instead, the information should be used as a basis to establish whether the candidate is capable of effectively, honestly and transparently contributing towards the company’s financial management,” he added.

Furthermore, credit checks are just one piece of the puzzle. Kruger says in addition to credit checks, the following screening should take place for a complete picture of the candidate:

• Criminal records
  
• Academic and matric qualifications
  
• ID verification
  
• Fraud listing
  
• Employment history
  
• Fit and proper screening
  
• Professional association membership
  
• Driver’s license
  
• Bank verification
  
• Business background search
  
• Professional driving permit
  
• Consumer Goods Council verification
  
• Citizenship verification
  
• Director/member confirmation