Does A Credit Freeze Affect Employee Background Checks?
Many consumers place a freeze on their credit for added security. Find out what a credit freeze is, and whether a credit freeze can affect background checks.
Credit Background Check
Credit Background Checks & Reports for Employees
A credit background check for employment is an important way to manage risk in hiring when you need a candidate with strong fiscal responsibility.
Trust & Safety
Why Credit Background Checks Matter
Reviewing your candidate’s credit history provides insight into a candidate’s integrity and responsibility toward his or her financial obligations, and are recommended for positions where access to financial assets, transactions, and decisions are a primary responsibility. Benefits of credit checks for employment include:
- Reduced risk of negligent hiring lawsuits, theft, or embezzlement
- Clear picture of a candidate’s financial responsibility
- Ability to make informed decisions based on reliable records
Results
Credit Checks For Employment: What Gets Reported
Employment credit checks show a record of a person’s credit-to-debt ratio and past bankruptcies, providing insight into how someone has managed credit and bill payments in the past—an important indicator for positions where the employee will be handling or managing money. While credit checks for employment do not report credit scores, results may include:
- Names and addresses of current and previous employers
- Notifications of bankruptcies
- A record of the individual’s credit and payment history
- Any unpaid bills turned over to a collection agency
- Other credit inquiries that have been made on the candidate
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Compliance
How Can You Stay Compliant With Credit Background Checks?
Employers must follow the federal Fair Credit Reporting Act (FCRA) when running employment credit checks, including disclosure, authorization, and consent requirements. Employers must also follow the adverse action process when deciding not to hire based on information in a credit report. Learn how GoodHire’s built-in compliance workflows can help.
State & City Laws Also Apply
Several states and a few cities like New York and Chicago have restrictions on how employers can use employment credit checks in hiring. Typically, the use of credit history is prohibited unless the employer or employee falls into special categories, such as an employee who would:
- Handle large amounts of money
- Work in a managerial capacity
- Have access to trade secrets
- Work in a field (such as financial services) in which regulations require credit reports
Resources
More Information About Credit Background Checks
Easy to Get Started
Employers Must Be Credentialed First
Before running credit background checks for employment, employers must first meet specific eligibility requirements set forth by the FCRA. The process generally takes 3-5 days, and in some cases may require an on-site inspection to verify your business, which requires a one-time fee. GoodHire’s step-by-step workflow will take you through the process. Get started running employment credit checks in three easy steps:
1
Create A GoodHire Account
Start by completing GoodHire’s sign up process, or sign in to an existing account.
2
Meet Eligibility Requirements
Online questions determine your eligibility to run credit checks and identify any required legal documentation.
3
Complete On-Site Inspection
A certified inspector verifies your business’s legitimacy with an on-site inspection (if required).
