Should we use Credit Reports as a part of the Recruiting Process?

Should we use Credit Reports as a part of the Recruiting Process?

Many recruiters represent a candidate I represent my clients who are generally small and medium size businesses.  Many do not have HR Departments who would follow Employment Law.  With the recent news that the E.E.O.C Sued Kaplan Higher Education Corporation I want to make sure that my clients are aware of the law suit and understand how credit reports can be used in the hiring process.

The E.E.O.C. sued Kaplan for discriminating against black job applicants through the way it used credit histories in its hiring process.  Considering that over half of employers use credit reports in some hiring decisions, many experts question whether the E.E.O.C was using Kaplan to set an example to employers who are denying jobs to applicants with damaged credit histories, even in cases where creditworthiness may not be  relevant to the job.   Yet many states have already or are considering protecting the vast number of unemployed and/or financially distressed Americans by banning or limited the use of credit reports to make hiring decisions.   Given the number of Americans out of work it is very common to see, shall we say, messy credit reports.  I check credit reports as a part of my recruiting process for my clients and rarely do I see a clean credit report.  If I had to cut every candidate with a few hiccups on their credit report my clients would have a tough time finding an employee.  And it’s clearly not a black and white issue.  The questions I would ask are what are the patterns on their credit reports and how severe are the “hiccups”?  For example, are there late payments or are their bankruptcies? In addition its important to discuss with my client how the candidates’ credit report history is related to the job they are being hired for and how their credit history is necessary for business.

As a recruiter for small and medium size businesses its important that my clients trust those that they hire and as a team we create an environment free from fraud and theft.  To choose honest, able and reliable employees from a large candidate pool its important to consider the entire recruiting process the phone interviews with the candidates as well as their professional references.  It’s important to bring in a candidate more than once to interview with various people within an organization.  It’s important to run criminal background checks.  And, its important to consider how the candidates’ credit history may impact their job performance if at all.

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