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Five things you need to know about pre-employment credit checks

It’s becoming more common for employers to perform credit checks on candidates. The number of UK workers being rejected for jobs because of bad debt is on the rise, and has become the most common reason potential employees fail their vetting test. To understand the what and the why, we ask Director of Reed Screening, Keith Rosser, five key questions about pre-employment credit checks.

1. What is a pre-employment credit check?
 

“There are a range of checks you can carry out on a candidate, and these inform an important part of the recruitment process. They help employers to understand the financial situation of a candidate – to help them reduce the risk of employee fraud – as well as helping to comply with UK law.”

2. Why should employers perform credit checks?
 

“Many employers would argue that assessing a candidate’s financial situation reduces the risk of fraud being committed. There’s a school of thought that the ‘bad debtor’ classification indicates the person may commit fraud in future. This is challenging as there are many cases where people with no debt go on to commit fraud. While predominately used in the financial sector, an increasing number of employers in other industries are performing pre-employment credit checks, such as healthcare and engineering.”

The number of people rejected for jobs because of bad debt has grown 7% since 2016.

3. What is looked at when performing a credit check?
 

“A typical pre-employment credit check will check public and private databases for a candidate’s County Court Judgements (CCJs), bankruptcies, voluntary arrangements, decrees and administration orders, as well as the candidate’s electoral roll registration to confirm their current address. However, it should also be taken into consideration that debt levels across the UK have risen because of economic factors largely out of the candidate’s control.”

4. What can a candidate do to aid their credit screening when they apply for a job?
 

 “Candidates can check their credit reports easily online, but for many, it won’t have crossed their mind that an employer might check. Make them aware of the fact and tactfully advise that they should be keeping an eye on their financial health with simple things like making sure they’re meeting monthly payments in a timely fashion. As there is no standardised approach to pre-employment credit checks, requirements can change between companies – which is why we are lobbying for a universal approach.”

Candidates can easily check their credit with free reports readily available online.

5. What services do REED provide?
 

“REED is one of the UK’s largest pre-employment screening businesses. As part of a commitment to reducing risks and with our roots firmly in recruitment, REED uses market knowledge and expertise to recommend a background screening package that best suits the needs of your business.”

Get in touch today to find out how our additional services can benefit your recruitment strategy.

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