If you’re looking for a new job, the last thing that crosses your mind is how does my credit history look? I mean why would it? Surely your credit history doesn’t reflect on how well you can do a job? However, the practice of reviewing a candidate’s credit history is becoming globally accepted and no more so than in India. Employers now see it as much a part of the candidate selection process as appraising your CV and social media profile.
Opinions on whether or not this is fair vary. Those that support the practice feel it is no different than checking a candidate’s references. Those against believe that your credit history doesn’t reflect your ability to do the job and argue that life events such as illness, divorce or a redundancy can cause havoc to your otherwise perfect credit score.
There are those jobs where you would expect your financial history to be reviewed such as those that involve dealing with money, but is it really relevant if you don’t handle money? The answer is a resounding yes. The State Bank of India, the country’s largest lender, for instance, when recruiting for customer support and sales in 2016 made it very clear that those with a poor credit history need not apply₁. They are not the only ones; Life insurer Star Union Dai-ichi has also used credit history as a means of selecting candidates.
The process is does seem to be focussed on mid to senior level employees, as junior level roles have a higher turnover and are usually not given big responsibilities. Therefore, companies are not too keen on investing time and money for an exhaustive background check on entry-level recruits.
5 Barriers For
Background check is one of the barriers faced
by international recrutiers while hiring
So why do employers look at your credit history? Many employers do so in order to separate one candidate from another. Or maybe a company just wants to get a better idea of the person it’s considering hiring and believe that your credit history reflects how responsible and ethical you are. Some even believe it offers a snapshot of how committed you will be to the new role, assuming financial issues have a negative effect on your job. For most, it simply allows the employer to go one step further than taking character references.
What is clear though, job seekers must be prepared to deal with a potential employer looking at their credit report, especially as the job market becomes more competitive. IMS One World, who offer Talent Acquisition solutions to companies worldwide, has certainty noticed a move towards this practice by their clients. Robin Thomas, Director Operations at IMS One World commented “Our clients have started asking for credit checks on new recruits to establish their financial standing. This enables our clients to analyse the profile more deeply and understand their attitude towards financial planning. These are usually requested for management and leadership roles, and provide clients with a clear prospective of the self-management skills of the candidate.”
Robin continued “it’s highly essential to check the credit report for candidates working on certain roles that involve financial integrity, this helps negate any possibility of emotional or situational error to be committed by the candidate.”
Robin advices potential recruits “Candidates have to give approval for any credit check to take place. Hence they are aware of the information their prospective employer is going to witness. Therefore, they should make it a point to share and explain any situation that could be misleading in those reports well in advance.”