When applying for jobs, it’s not uncommon for companies to carry out a credit search as part of their pre-employment checks. Although many people assume that the search is the same as the one used for credit applications, this isn’t the case.

The following is an overview of what employers can see on a credit report, and how they can influence hiring decisions.

What Are Pre-Employment Checks?

As the term implies, pre-employment checks are screenings carried out before a job offer is made. As well as consisting of credit checks, pre-employment checks can also include DBS Disclosures and Driving License Checks.

When hiring new employees, companies will often include the checks needed in the job description. Although a person can refuse a credit check, the businesses can end the hiring process, as it will be unable to verify whether a person is a threat to the company or the right fit for a role.

What Information is Shown on a Pre-Employment Check?

The information obtained regarding a pre-employment check can depend on the methods of background screening used.

Credit checks for pre-employment screening are referred to as ‘soft searches’ and won’t impact your credit file. Although a company wll be unable to see a person’s credit score, they will be able to ascertain current credit, plus any defaults or CCJs.

Which Credit Reference Agency is Used for Pre-Employment Check?

There can be some confusion regarding credit searches due to there being three reporting agencies. Companies may use Experian, Equifax or TransUnion singularly or all together. Although the details shown can vary, a realistic overview of a person’s credit history can be obtained when using one of the official agencies.

Those who are unsure of what details are shown on their credit report can request a copy from each agency. In addition to allowing a person to proactively monitor their credit history, it can also ensure that all the information recorded is correct and up to date.

Can a Company Legally Refuse a Job Role Based on Credit History?

There can be unavoidable circumstances in life and being judged on credit history can seem unfair. However, a business has a responsibility to ensure that both its customers and employees are protected, so can refuse a job role if it feels it could pose a threat to the business.

However, this doesn’t mean that those with poor credit will be refused a job. Although a person may have had credit problems in the past, maintaining payments moving forward shows that they have taken responsibility, which can be considered a positive trait.

Companies will frown upon information that shows the person to be irresponsible with funds or could be part of something more nefarious involving identity fraud.

Applying for a job can be overwhelming for some, especially regarding background screening. However, monitoring credit reports and being honest with employers means a business can obtain more context and make an informed decision when hiring.