Employment Screening and Credit Reports - AutoSuccessOnline

Employment Screening and Credit Reports

Pulling credit reports on a customer makes sense when determining the credit worthiness of a person who may be financing a car or other item. However, pulling a credit report based upon a person seeking employment with a company is a whole different matter.

Pulling credit reports on a customer makes sense when determining the credit worthiness of a person who may be financing a car or other item. However, pulling a credit report based upon a person seeking employment with a company is a whole different matter. Employers should be very wary of pulling credit reports on an applicant for employment purposes and using said reports to make a hiring decision unless the position oversees, handles or manages money.

When the financial markets crashed in 2008, commonly referred to as the Great Recession, millions of hardworking and responsible people lost their jobs, their homes and their dignity. Home valuations were bloated; people were provided credit with little to no financial backing or collateral, resulting in John Q. Citizen becoming overleveraged. When the crash occurred, inflated home values plummeted, hard-working people could not pay their mortgages, some had their homes foreclosed or were forced to sell their homes for less than the mortgage owed. 

As a result, many people took a financial hit, which was reflected on their credit reports. It has taken years for most people to recover from that experience and some residual of that period of time can still be seen on people’s credit. Therefore, generally speaking, pulling an applicant’s credit as part of the background screening process usually will not assist the employer with making an informed hiring

decision. A blemish on a person’s credit report is not indicative of a person’s work capabilities and ethic.

Employers should only pull a credit report on an applicant if the position’s responsibilities include overseeing, handling or managing money. When pulling a credit report on an applicant, the reasons for the pull should be related to the job they are being hired for and for business necessity. 

For example, a car detailer at a dealership will not handle or manage money, therefore there is no job relatedness or business necessity

to review the applicant’s credit history. Conversely, a position that requires a person to oversee or manage money satisfies the job-related criteria for having credit pulled on the applicant. Similarly, business necessity and job relatedness would suggest a credit report be pulled on an applicant who is applying for the comptroller position for a car dealership.

The Equal Employment Opportunity Commission (EEOC) has spoken out against running credit reports on employment applicants as a general course of conducting background checks. The EEOC has suggested such a practice might be discriminatory against minorities and women, unless the position has a business necessity and job relatedness requirement to do as such. 

Overall, there are many components to hiring applicants for your company, one such component involves conducting background checks. As a rule, pulling a credit report

on all employment applicants may not be appropriate, particularly if the position does not oversee, handle or manage money. Understanding a person’s credit history if they have the responsibility of managing or handling money is the correct utilization of credit reports in the hiring process.

The author of this article is not an attorney and offers no legal advice. The contents of this article should be reviewed by your corporate attorney before taking any action based on its content. 

Click here to view more solutions from Andrew Scott and Scott-Roberts & Associates, LLC.

You May Also Like

Google Analytics for Dummies

GA4 can help you understand which marketing sources drove traffic to your website, allowing you to compare one to another.

Google Analytics for Dummies A Simple GA4 Guide for Non-Analytics People

A Simple GA4 Guide for Non-Analytics People

G4? GA4? Google Analytics? Are they all the same, and how do they relate to the metrics my website vendor sends me? 

First off, I don't sell any products related to analytics or analytics consulting. Our company does help our dealer partners with this area, but this article is purely intended to inform, and I don't have a dog in this fight. My product is in the digital marketing realm, so we interface a ton with analytics. Moreover, I get dozens of analytics questions every day, and there’s understandably a lot of confusion about this topic.

Exploring Educational Opportunities with NADA and ATD

The comprehensive NADA and ATD programs, complemented by an extensive array of resources, foster excellence and innovation within the automotive retail landscape.

Exploring Educational Opportunities with NADA and ATD
Critical Thinking with the Genius Club

A lack of critical thinking is responsible for the success of every con that reaches epic proportions. We must think critically to protect ourselves from evil geniuses.

Critical Thinking with the Genius Club - Remora
Latest Toyota Data Breach: Evidence of an Industry Under Attack

Hackers have identified the auto industry as ripe for the picking. Attackers often share information regarding potential targets and methods.

Latest Toyota Data Breach: Evidence of an Industry Under Attack
Don’t Be ‘Nice’ to Your Team — Be Caring

Here are four steps to take to lead a team that minimizes critical actions and will put our team members on the path to success.

team leadership

Other Posts

Riding the Wave of Innovation: How Advanced Data Tools Are Transforming Automotive Appraisals

The ability to customize appraisal tools according to specific dealership needs and market dynamics ensures that appraisals are closely aligned with strategic goals, giving dealerships a competitive edge.

Riding the Wave of Innovation: How Advanced Data Tools Are Transforming Automotive Appraisals
Selecting the Ideal Car Lift for EV Servicing

When choosing the right car lift for servicing electric vehicles there are several key factors to consider.

Key Factors in Selecting the Ideal Car Lift for Electric Vehicle Servicing- Coats
F&I 2024 Dealer Outlook: How Online Options Will Help Dealers Better Serve Customers

Dealers must find ways to maximize F&I sales opportunities, because in this highly competitive landscape, dealerships rely on the sale of these products to enhance their bottom line and remain competitive.

F&I Outlook from Protective Asset Protection
Hybrid Intelligence: The Seamless Fusion of Human and Artificial Minds

Learn how Hybrid Intelligence hasn’t just turned this dealership around, but has set it on a path to unprecedented growth and success in a challenging market.

TECOBI, artificial intelligence, Hybrid Intelligence,