Background credit checks can assist employers to avoid hiring applicants who might be at risk for fraud, theft, or embezzlement. Why job offer rescinded after credit check? Is it appropriate to withdraw a job offer because of a negative credit check?
Learn what factors to take into account while making this choice and what actions to take to safeguard your business and candidates, and uphold ethical and legal hiring procedures.
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Can A Company Rescind A Job Offer After Credit Check?
Yes, following a credit check, an employer can rescind a job offer in the majority of states. This is a fairly typical practice; in fact, 9 percent of employers say their final hiring decision is influenced primarily by an applicant’s credit history, according to a poll by the Society for Human Resource Management (SHRM).
Why Credit Check Is Important?
Before deciding whether to rescind a job offer based on a credit check, it’s important to first understand why these types of checks are important. Certain positions in industries such as accounting, finance, public services, government, or trade typically require employees to manage, handle, or access large amounts of capital, including:
Company budget and accounts
Corporate credit card
Buying and trading, etc
As a result, employers basically want to know and understand the personal finances of candidates to help ensure that they are hiring qualified people with the utmost integrity and financial responsibility. Background credit checks help protect employers from hiring candidates who may pose a significant risk to the company through potential theft, embezzlement, fraud, and bribery.
When To Conduct A Credit Check?
The only time it makes sense for me to run a credit check on a candidate is if the position has some financial responsibility associated with it, or if the position will give the candidate access to company funds or credit cards. These positions are common in finance, accounting, government, and trade.
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But if the job being filled has nothing to do with money or finances, it doesn’t seem relevant to me to know the applicant’s credit score, the amount of debt they have, and whether they pay on time.
Notably, 11 states prohibit employers from discriminating against applicants based on their credit, regardless of the job title. In states where it is legal to conduct credit checks during background screening, employers must obtain written consent from applicants. Candidates do run a significant risk of being turned down for a job if they disagree.
Here’s some of the information that will appear on your credit report:
Summary of credit card and bank loan arrears.
Late payments on credit cards or loans.
Credit limits, civil actions involving credit, collection, and bankruptcy.
Type of loan, payment terms, and payment amount.
Disclose any other credit reports of the applicant.
When A Job Offer Rescinded After Credit Check
Employers may consider rescinding job offers and looking for candidates with better credit histories if they are in serious financial difficulty. After all, it’s not unreasonable to assume that candidates who can’t manage their own finances well will manage the company’s finances better.
It’s even possible that a candidate with serious financial difficulties has easier access to company funds, whether it’s a cash drawer, a credit card, or a checking account. It is especially important to employ trustworthy people in government jobs that handle public funds.
A background check or reference report will provide an employer with more information about job performance than a credit check might provide. As part of a comprehensive background and reference check, a credit check makes sense, especially if the position will include access to the company’s cash drawer, credit card, or checking account.
However, it is neither good nor fair to use credit checks as the only check on a candidate’s employment — just as it really makes no sense to base hiring decisions on a candidate’s height.
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When The Credit Check Results Cannot Be Accessed
In some cases, employers or third-party screeners like GoodHire run credit checks, but there are no results. In these cases, candidates may face what is known as a credit freeze, which denies access to their credit information to anyone, including lenders, credit bureaus, and background check companies (also known as consumer reporting agencies or CRA).
Anyone can freeze and unfreeze their credit at any time within one to three working days. (In some cases, pins can be provided to the CRA to access credit data and complete the report.)
Many people freeze their credit to prevent anyone from opening a new line of credit in their name if they suspect their personal information has been compromised. While a credit freeze does not affect a person’s credit history, it may prevent screeners from accessing credit information that may be needed as part of an employment background check.
So when deciding whether to rescind a job offer: take additional steps.
Since candidates will be informed of (and must agree to) their upcoming credit background check, they can communicate with you or the screener about the timing of the check. This way, candidates can unfreeze their credit for the necessary credit checks and freeze it again when completed.
Many people may have faced this situation: I recently accepted a job offer from a well-known company, but I haven’t heard back yet. What does it mean？
Respond To A Job Offer Rescinded After Credit Check
If an employer withdraws your job offer because you do not meet their credit requirements, take the following steps:
Review Credit Report
If your job offer is rescinded after a credit check, then it’s best to check your credit report for errors. These can include payments falsely reported as late payments, as well as debts that actually belong to someone else, usually someone with a similar name or Social Security number.
If you find that a credit report error costs you a job offer, contact your potential employer and explain the situation to them. Whether or not they are willing to reconsider their decision, make sure to dispute the error on your credit report with the credit bureaus so it won’t cost you another job later.
When your credit check fails, you typically have 60 days to get a free credit report from the credit bureau TransUnion, Equifax, or Experian, which provides it to your prospective employer.
Talk To Employer
If you explain why you have derogatory content on your credit report, you still have a chance to convince your future employer to hire you. For example, many people end up in debt after incurring high and unexpected medical expenses. If you have a good reason for your financial problems, tell them.
Know If It’s Fair To Rescind A Job Offer
If you suspect that your employer is imposing higher credit requirements on you because of your race, color, religion, gender, or disability, file a complaint with the EEOC.
You can also Sue your potential employer for damages (such as relocation costs) if they rescind your job offer after agreeing to give you the position. A case like this can be difficult to prove, so contact an attorney to see if you have grounds for a claim.
Begin Applying For Other Jobs
If your employer rescinds your job offer and you have to apply for other jobs, it’s worth explaining any derogatory marks on your credit report early in the application process (perhaps during the first or second interview).
Hopefully, you’ll make a good impression on a future employer by solving this problem, and at the very least, you’ll quickly know how likely you are to get the job.
Conclusion
Most states allow employers to examine your credit. However, there are limitations on when employers can check your credit in 11 states, including Washington and Colorado.
If you have significant debts or late payments on your credit report, your prospective employer is more likely to withdraw their employment offer.
If you have an offer withdrawn, look for and correct any inaccuracies on your credit record to prevent them from harming your chances of landing a job in the future.
If you find any significant problems, get in touch with the company that canceled your offer. They might change their minds.
Always make on-time payments to your creditors and keep your debts to a minimum to avoid your company pulling your job offer.
