Make that loan or card payment on time as defaults could hamper your chances of getting a job. A financial credibility check is just one component of the background screening report that employers could ask for.
Can your credit report hamper your chances of landing a job? The answer is yes for many companies, especially those in the financial and insurance sectors who are hiring candidates only after conducting a thorough financial health check of employees they want to hire. The credit scores of individuals are an indicator of their personal integrity and honesty.
Many firms share high-risk information about stocks and shares etc with their employees and therefore wish to get a fair idea about the risks associated with the person they intend hiring.
A financial credibility check is just one component of the background screening report that employers could ask for. It is part of the multiple checks conducted by companies such as address verification, educational background, criminal record etc.
According to Navin Chugh, senior vice president and managing director, First Advantage, India, a background screening company, “more and more companies are using credit reports as a screening tool to evaluate candidates.”
With a drastic rise in white collar crimes and growing financial fraud in India, from cash and information theft, money laundering, and the sale of private and valuable customer credit card data, it is becoming imperative for firms to mitigate financial and employee flight risks. Many multinational and domestic banks are adding credit health checks to the standard scope of pre-employment checks.
The First Advantage report is based on the credit report from the Credit Information Bureau India Limited (CIBIL) report. The financial check report it is not just based on the credit score; it’s an in-depth analysis of the information embedded in the score, and hence gives a holistic view of the candidate’s financial background. It takes into consideration the behavioural indicators based on the recent credit history, for an individual or a firm, and provides valuable insights into financial risk, credit risk and credibility risk.
So, how is the information shared? Employers cannot access an applicant’s credit report directly from CIBIL. “The Credit Information Companies (Regulations) Act 2005 permits us to share information only with credit institutions, specified users and with individual consumers on their request. Individuals are accessing their own credit report and score from CIBIL. If companies ask prospective employees to submit their own credit report, then they will have to access it from CIBIL and submit the same to the company,” says Harshala Chandorkar, senior vice president- consumer relations, communication & CIC Compliance, CIBIL.
“When hiring at the CEO and leadership level, from a sourcing channel (not from a known network) or through references, you need to be sure of the financial credibility of the individual, as their jobs would involve taking daily financial decisions. Financial credibility checks provide critical inputs on the individual’s self-discipline, his/her attention to detail besides on the integrity of an individual,” adds Raj Reddy, SVP, chief HR officer, CSS Corp.
All about credit checks
For whom are credit checks conducted?
These checks are conducted for banks and financial institutions, telecom, utility companies, BPOs and for companies that have a large network of vendors and service partners.
Why are they conducted?
They are conducted to assess an employee’s credibility and financial history and risks thereof, to assess his likely future behaviour through his or her repayment history.
How are these checks conducted?
The applicant provides a credit report (if asked) or verification companies procure the report, in this case the CIBIL report of the candidate they intend hiring. The credit rating is then analysed and the report sent to the company.
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