5 Things You Should Know About Pre-Employment Credit Checks

Are you looking to get hired for a bigger role? Or are you simply shifting careers? Either way, pre-employment checks will always be part of the application process. These include previous employment, CV and references, education, criminal background, social media, document verification, and medical checks. Apart from these usual parameters, companies may also conduct stricter background checking. In some cases, credit checks can also be part of the process.

Since finances are very personal matters, pre-employment credit checks may seem intimidating if you are only hearing about it now. So, here are five things you should know to help you better understand what is typically involved in the process.

What are credit checks?

To better understand why companies would require a pre-employment credit check, we must first define what it is.

Also known as “credit background check” or “credit report”, a credit check documents a person’s credit-to-debt ratio and how they manage their bill and credit payments. Essentially, it indicates whether an individual is financially responsible or not, or if they are in financial trouble. It can also be used to verify an applicant’s identity.

As such, credit checks are a standard requirement for anyone applying for any type of loan. You might have gone through a credit check to apply for credit cards, home loans, and car loans.

During hiring, employers may also be concerned about a jobseeker’s potential financial stress. Generally, financial life can also affect productivity, increase absenteeism, and cost higher group healthcare for the company.

Across the globe, an employer can view your credit report, but not your credit score. Additionally, all credit checks done for hiring processes do not affect your actual credit score. According to Bank Negara Malaysia’s Credit Bureau, this report also contains outstanding credits, special attention accounts, and applications for credit approved in the last 12 months and other pending applications.

It often depends on what industry or role you are applying for.

Credit reports are more typically used by financial institutions for evaluating credit applications. However, employers can also use them for situations where it is crucial to their industry or the role they are hiring. For example, companies involved in financial services will most likely do a credit background check for all applicants. Likewise, companies hiring for any role that allows access to sensitive company information, customers’ financial information, or confidential employee information will conduct a credit check.

Employers need your permission before they can do a pre-employment credit check.

Companies must obtain written permission from their employees or applicants before they conduct credit checks. They should also mention that any information from this background check may be used in hiring or employment decisions. If they opt against hiring you because of what they found out through the pre-employment credit check, they should also send you a notice that includes the report that influenced their decision.

Bad credit can cost you your job, promotion, or job application.

Pulling up your credit record will not reveal your credit score to potential employers. However, anything that suggests a negative financial reputation or standing will impact their assumptions about your character, judgment, and professionalism. If they see that you cannot seem to effectively manage your own obligations, how can they expect you to be responsible with your duties at work? As such, bad credit can make employers decide against hiring you, promoting you, or even keeping you for positions where you can access or manage company funds, customer payments, or financial information.

Tip: You can check your credit report before your employer does.

Fortunately, you can check your credit report before your potential employer does. Finding out what appears in your credit report allows you to remedy potential errors that can cause you to miss an opportunity to get hired or borrow money. The good news is, it is now very easy to check your credit report and run a personal background check through service providers, both local and international. In Malaysia, you can request access to your credit information through the Credit Bureau, CTOS Data Systems Sdn Bhd, and Experian Information Services (Malaysia) Sdn. Bhd.

Ready to get that dream job and feeling confident about your credit report? Create or update your JobStreet profile today and search for #JobsThatMatter. Get hired faster by adding #WorkNow to your profile. Visit the Career Resources hub for more useful tips on job searching, self-improvement, and career advancement.

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