If you are an owner or a hiring manager of a business, there will come a time when want to grow your organization and hire someone new. As you are looking to add more staff to your team, doing the right diligence and completing necessary background checks is very important. One part of this is to complete a credit background check, which will check the credit history of your applicant. There are a few reasons why you should have a third-party credit check completed as part of your background check process.
What is Included with a Third-Party Credit Check?
A professional credit background check will provide you with a variety of pieces of information about the applicant. While you will not receive the credit score, you will be able to see the applicant’s debt-utilization ratio, notifications if they have filed for bankruptcy in the past, and even a list of past employers. This information can give insight into the applicant’s overall creditworthiness and is also a way to verify their identity and professional background. There are a variety of reasons why you should obtain a credit check on new applicants.
Indication of Overall Responsibility
One of the reasons why employers will obtain a credit check on an applicant is that it can be an indication of their overall responsibility. When you are going to bring in someone new to your team, you will want to know that they are trustworthy and responsible. if the applicant has had financial challenges in the past, it could indicate that they are not very responsible. It is important to discuss negative findings with the candidate to understand what may have caused past financial challenges.
Ensures You Hire Right People for Certain Positions
One of the risks of hiring someone that has a challenged credit history is that they may be under financial strain. Someone that is struggling to meet their bills each month and is in a lot of debt could pose a higher risk of theft. Due to this, many employers will avoid hiring people with poor credit histories into positions where they will directly manage and move money for the company.
Another reason that companies should complete a credit background check is to ensure they remain in regulatory compliance. While doing a credit check is a good way to ensure you are being diligent with your hiring practices, it may also be required from a regulatory compliance perspective. Depending on the industry you are in and the position that is being filled, having a credit check completed could be a necessity and requirement. Fulfilling this requirement can help you avoid regulatory penalization and can also reduce liability risk as you will be able to evidence that you have fulfilled this obligation.
Why Use a Third-Party Service?
When you are going to complete a credit check on new applicants, using a third-party service is a good option. These services can offer you a variety of benefits that will ensure that you are getting accurate reports and that full compliance is being followed when obtaining this information. They can also provide you with insight into how to analyze the information you have received, which will make it easier for you to make an educated decision and assessment of the applicant’s creditworthiness.
Those that are going to try and grow their company should ensure that they make wise hiring decisions. An important part of the hiring process is to complete various personal background checks, which should include completing a credit check. There are a few reasons why using a third-party service to complete a credit check is a good idea.
Raj Kumar is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance clap.