Talent At Work: Recruitment and Career Blog

Do credit checks really prove your job-worthiness?

Posted on February 25th, by Lougie in HR Management, Recruitment. 1 Comment

Job applicants who make the cut at TD Canada Trust get something else with their formal offer of employment: a form asking them to agree to a personal credit check.

“We do credit checks on all [potential] employees,” says Josephine Quercia, manager of talent systems and programs at TD Canada Trust. “It’s part of our best practices and part of our responsibility as a corporate citizen because of the trust placed in us by our customers, shareholders and employees.”

TD is among the many employers in the country that use credit checks as an additional layer through which to screen prospective employees. While there are no statistics on the prevalence of this practice in Canada, a 2009 survey by the Society for Human Resource Management – which represents HR professionals in more than 140 countries – found 47 per cent of companies ran credit checks for certain positions while 13 per cent did this type of screening for all jobs.

Of the 433 U.S.-based and multinational companies that responded to the survey, 91 per cent said they did credit checks for positions of financial responsibility – where, for example, an employee deals with cash, banking or accounting – while 46 per cent said they did it when hiring senior executives such as a CEO or CFO.

Theft and fraud prevention was cited by 54 per cent as the main reason for checking job applicants’ credit history. The second most common reason was to reduce the company’s legal liability for negligent hiring, while the third reason, cited by 12 per cent of respondents, was to assess a job candidate’s trustworthiness.

“The thinking behind pre-employment credit screening is, basically, an employer wants to know if your house is in order before they let you handle their house,” explains Tim Hardie, president of Hire Performance Inc., a company in Markham, Ont., that provides pre-employment screening services, including credit checks. “Knowing how you handle your own financial situation is especially important if your job involves handling cash or finances.”

Mr. Hardie says he’s seen an increase in requests for credit checks over the last 13 years his company has been in operation. But companies aren’t just reviewing job applicants’ credit information; many are also using the credit reports to confirm previous employment.

“The reports are a good way to verify that a person is who they say they are,” says Mr. Hardie.

Glenn Swan, president of SwanStaffing in Toronto, says pre-employment credit checks used to be confined to large multinational corporations. Today, however, he is seeing smaller companies also doing credit checks before hiring – a development he attributes partly to tighter post-recession budgets that leave little room for costly hiring mistakes.

“There’s a cost involved every time you hire a new person,” says Mr. Swan. “After the recession, everybody has become incredibly sensitive to making sure they’re making the right hire, and a credit check is one of the tools employers can use to carefully assess a potential hire.”

Gerlinde Herrmann, president of the Herrmann Group Ltd., an executive search firm in Toronto, notes that pre-employment credit screening is less prevalent in Canada than it is in the United States.

However, a number of states are considering a ban on the practice. Washington and Hawaii already have restrictions in place.

While the practice is well entrenched in certain industries, such as pharmaceutical and financial services, in most other sectors some companies may do it while others in the same type of business don’t, says Ms. Herrmann, who is past president of the Human Resources Professional Association, which regulates the HR profession in Ontario.

Tony Rubino is one employer who doesn’t believe in snooping into workers’ credit histories.

“There are other ways of gauging a person’s character,” says Mr. Rubino, president of Resource Integrated, a Toronto company that provides printing and creative services. “One of the best ways is just taking the time to really talk to someone during a job interview, go beyond the usual questions.”

Besides, adds Mr. Rubino, a poor credit score doesn’t necessarily point to a financially irresponsible person; it could also be the result of difficult times such as a job layoff or a divorce.

Do make sure the nature and duties of the job necessitate a credit check.

Source: Globe & Mail, Marjo Johne

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Marketing Consultant at Codemedia Inc
Information Technology and Marketing Consultant

One thought on “Do credit checks really prove your job-worthiness?

  1. I think that consumers and employers should be aware that credit screening is a tool that is widely used as a tool in screening applicants. Applied correctly it can be useful for both the applicant and the employer. The company I work for has an interesting article on credit checks that may add some additional information that could be helpful.


    Hope your readers find it useful.

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