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Congratulations! You made it through the long interview process, and you have received a job offer in the post. But at the bottom of the letter, after the important stuff about salary and holiday entitlement, is a single sentence about the offer being subject to background screening. This is becoming increasingly common in the UK and background screening refers to the checks and searches which an employer might do before taking on a member of staff. Some employers may conduct the checks themselves, others may ask a specialist company to do it for them. Background checking isn’t necessarily something to be frightened of, and many of the checks you can run yourself to see what might come up on a screening check.

Inconsistencies and Discrepancies

Perhaps the most common check is a close inspection of both your application form and CV. This is often done pre-interview, but screening companies may be able to pick up issues which have been missed. Screening companies, or in-house HR departments will make sure that the information you have given on your application form is the same as that on a CV and might compare that with other public profiles on sites like LinkedIn or Facebook. Finding that someone has given three different dates for when they attended university, alarm bells might be ringing. Make sure that you are presenting a consistent back story about education and employment and can explain any gaps in your education or employment history.

Credit Checking

If you are applying for a job in financial services, then you might be asked to consent to a credit check too. Credit checks look at your basic financial situation and aim to weed out people whose serious financial difficulties mean they could be tempted to commit fraud or be vulnerable to blackmail or pressure. Your own financial information is yours, and you can look at the same information as an employer can, so it is worth doing this to make sure there are no nasty surprises in store. It’s surprising how many credit records contain basic errors, so contact one of the major credit referencing agencies to request your file and make sure there are no accounts you don’t recognise or defaults in your name. There is lots of information online about steps which you can take to improve your credit score.

Social Media Screening

One of the easiest things to do for an employer and the applicant is a social media screening. This involves looking at your Instagram, Facebook, Twitter or LinkedIn accounts to make sure that you aren’t posting or sharing content which calls your character into question. It’s very easy to do this screening yourself, by logging into the site and seeing how your profile appears to someone else. Sharing pictures of your cat or children isn’t going to raise red flags, but following extreme political content or several critical posts of a former employer might. Delete any posts you don’t wish to be seen or tighten your privacy settings so that very little is visible to people you don’t know personally.

How interviews are conducted has ensured businesses and organisations can interview people in any location, regardless of how remote they are. However, there is more to assessing whether a candidate is a good fit for a role, and a pre-employment credit check is essential for making an informed decision.

There may be several checks that need to be carried out in addition to a credit check, depending on the nature of the roles. However, a credit report is essential for a job interview for the following reasons.

Assess the Identity of the Candidate

Although surprising, employment fraud can cost businesses a lot of money. As such, ensuring a person is who they say they are is of the utmost importance. A background check can consist of several processes, but a credit check ensures employers can carry out a thorough background check.

Even though a credit check is carried out online, the complexity of the methods used for document verification means even the most sophisticated of fraudulent documents are detected.

Check Whether a Person is a Good Fit for a Role

Being responsible with money is not always a prerequisite for a job. Still, it can help businesses decide whether a person is a good fit, especially if the role involves management or finance. Of course, poor credit history doesn’t necessarily mean a candidate is nefarious, but it does allow companies to make an informed decision when filling a position.

What Is Needed to Carry Out a Credit Check?

Companies and organisations can only carry out a credit check after permission has been given, so this needs to be sought in the first instance. To carry out a credit check, a full name and address will be required, as well as any addresses used in the past.

In some instances, document verification for a credit check will be needed. This can occur if recent details have changed, or a company has difficulty locating the person’s details.

Fraudulent documents are becoming more sophisticated, but so is the software used to counteract fake paperwork. Using an external agency for document verification gives companies and organisations carrying out credit checks the ability to ensure all documentation forward to support an application is genuine.

How Long Does a Credit Check Take to Complete?

Regardless of why a credit check is carried out, it is typically completed relatively quickly. However, there can be instances when it can take as long as ten days. Document verification ensures that background checks can be done as soon as possible while giving companies confidence that assessments are completed thoroughly.

If you’re currently considering hiring a new person or carrying out a complete recruitment drive, then a credit check can make all the difference regarding a successful hire. Furthermore, document verification helps ensure that credit checks aren’t delayed when waiting to offer a person a position.

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.

A credit report summarises a person’s credit commitments and any CCJs or defaulted payments. Credit scores are updated every 45 days approximately, but in most instances, a credit report will give lenders and employers a realistic overview of a person’s financial history.

There are three credit reference agencies, also called CRAs, so the information listed on each can vary. The three main reporting agencies are Equifax, Experience, and TransUnion, and each can show varying information, including the following.

Bankruptcies

Bankruptcies are created when a person cannot pay their debts. Companies or individuals can use Chapter 7 bankruptcies. An individual can only use Chapter 12 bankruptcy. Bankruptcies will continue to show on a credit report for approximately six years after the order is made.

Accounts Sent to Collections

If a business has tried to recoup payment but has been unsuccessful, the company will send its account to a collections department. Although common for credit cards and loans, collection accounts can apply to rent payments, mobile phones, and satellite television.

Soft and Hard Credit Check Enquiries

As companies can use credit checks for identity checks, two types of enquiries are carried out. A soft credit check is often used for job applications or pre-approved credit offers. These types of checks do not affect a person’s credit score.

However, those applying for credit will incur a hard credit check, which stays on a person’s account for two years. These types of credit searches can impact a credit score, so it is essential permission has been given beforehand.

Is There Information Not Shown on a Credit Report?

Although a credit report shows financial details, the information only relates to debt. As such, only credit cards, loans, and mortgages will show on a credit search. Any information regarding savings and current accounts will not be displayed, as this isn’t debt.

A credit report will also dismiss any information irrelevant to credit applications, such as marital status, race, disabilities, and religion.

Ensuring a Credit Report is Carried Out Correctly

Those wanting to check their credit file can make a request to the relevant agencies. You may need some form of identification if you have difficulty locating your credit file. Still, each agency will inform you of the necessary next steps for obtaining your score.

A business carrying out a credit check must obtain the person’s permission and personal details. In addition to a credit search, companies may conduct other forms of background screening, including DBS Checks.

A company must also ensure that any supporting documentation given is legitimate so it will take advantage of online document verification.

Carrying out a credit check for the first time can be overwhelming, but there is plenty of support for businesses that need to carry out credit checks continuously, ensuring there is little disruption regarding day-to-day operations.

Credit checks are often associated with financial products, but this isn’t the only instance when they are used. As such, a good credit score is essential for several reasons. The following is an overview of when a credit check will be carried out and why a good score is necessary.

A Good Credit Score Helps People Secure Lower Interest Rates

When carrying out a credit check for loans or credit cards, a person’s credit history will often dictate the interest rate they’re given. Those with good credit scores will often enjoy low-interest rates.

However, those with a low credit score are considered a risk, meaning if credit is given, the interest will be much higher than those with a good credit score.

Credit Scores Are Used by Landlord and Housing Agencies

Although many only think of credit checks when applying for finance and loans, they’re also commonly used when applying for a property lease.

If a person has a poor credit score, then this could affect the likelihood of an offer. In other instances, tenants may be asked to pay a larger deposit or secure a guarantor before a tenancy is offered.

A Credit Check Can Be Part of a Job Application

Companies can carry out several background checks when applying for a job, depending on the role. Although credit checks are used for those working in a financial setting, businesses and organisations can also use them to verify a person’s identity.

Permission will be needed before a company carries out a credit check, but a business must make an assessment to make a job offer.

Can a Credit Score Be Improved?

Given a credit score’s importance, many will be keen to see if they can improve it. Those who need clarification on what information is listed on their file can request a credit report from the following agencies.

Experian
Equifax
TransUnion

As the three agencies are separate entities, you will need a report from each to ascertain what details are held about you when a credit check is carried out.

The first thing you should do is ensure all the details held on the report are correct. Although mistakes are rare, they can happen, and the person has to contact the relevant credit reference agency to ensure that any misinformation is corrected.

If all the details on a credit report are factual, then a change in habit is often needed when improving a credit score. In addition to ensuring all financial commitments are made on time, you should also look to reduce any current debt you may have.

Financial difficulties can also cause a poor credit score due to not having money in place to meet financial commitments. If this is the case, you should seek assistance as soon as possible. Although the steps taken won’t mean an instant improvement to a credit score, reviewing and improving your current status ensures it will improve over time.

Many people can be under the impression that credit checks are only used when applying for loans, mortgages, and credit cards, but this isn’t the case. Although credit searches are used by those wanting to borrow money, they’re also used to verify a person’s identity and establish whether they’re the right fit for a job role.

The following is an overview of how credit searches are used when applying for a job and how credit history can affect employment.

Why Credit Searches are Carried Out

There can be many instances when those applying for a role aren’t always doing so for the right reasons. A business must undertake several checks to ensure Data Protection is maintained and the company is protected.

In addition to verifying a person’s identity, employers and organisations can also use them to check that a person is responsible with money, which can be essential when applying for a job involving finance.

If a good credit score is a role requirement, a business will typically make this apparent during its hiring process. However, those with any questions regarding background checks should reach out to the company before making an application.

Does Poor Credit History Affect Employability

A poor credit search may not look great, but it doesn’t always mean an employer will deny a job offer. However, if a person has stated the credit is flawless on the application, only for a credit report to show otherwise, this could be deemed dishonest.

As such, those unsure of their current credit score should obtain credit reports from Experian, Equifax, and TransUnion and ensure all the information is current.

Although each agency will give a realistic outlook of your credit score, obtaining a report from each ensures you have all the information regarding your financial history and allows you to make sure all the information contained on each is correct.

Can a Credit Search Be Carried Out at Any Time?

Companies who run a credit check as part of the job application will make applicants aware of this during the hiring process. Permission is needed to carry out a credit check, so a company can only request them after this is granted.

If regular background screening is a requirement for the role, then the business will explain this process. For example, although an employee may not need continuous credit checks, staff may require regular DBS Checks.

How Long Does a Credit Check Take?

Credit checks can often be completed in as little as two days, but there can be instances when the process takes longer. When the process takes longer, it can often be because the person cannot be located by the information given, so additional documentation is needed.

In addition to requesting the documentation, businesses will also need to ensure the documentation is genuine. Fortunately, this can be done immediately when using an external professional agency.