Does a background check include a Credit Check?

The availability of plentiful employment information on various job portals, as well as increased competition, has resulted in a desire among the youth to migrate to well-paying positions. As a result, they resort to methods like resume polishing, exaggerating achievements, and fabricating facts.

This is why employers conduct background checks to learn about your previous employment history, criminal records, educational qualifications, and proof of residency. If the new employee will be managing your company’s funds or accounts or working in the finance field, a background credit check of his financial integrity is required by law.

What is an Employment Background Check?

The background verification process of employment-related details is carried out by the HR department, including wage, designation, employment period, integrity issues, exit formalities, rehire eligibility, and so on. So, if you’ve been waiting for a response after a job interview, the company most probably looks over your resume right now and verifies the details. Unless you are in a finance background-related job, the credit check is not done.

Screening for an Employment Background helps you avoid hiring someone with a questionable background. This check is performed to qualify any discrepancies, relating to the candidates’ previous job assignments, providing us with an accurate and thorough picture of the candidates’ work ethics and employment history.

Key Parameters examined for reference are Employee Code and Name, Designation, Employment type, Department, Incharges Name, Incharges post, Date of Joining, Date of release, Annual Remuneration, Reason to Leave, Attitude, Integrity, Rehire; Yes or No(Why?), Exit Formalities & Additional Information(as credit check score).

Usually, the company’s Human Resources or Administrative department is the source responsible. In the case of small businesses, the founders, partners, directors, or some management roles carry out this function.

Normally, the complete process(with or without a credit check) is covered within 3 to 10 business days. It can go on if a company wishes to dig deeper into the candidate’s background (mostly done for senior-level hires).

What exactly is a credit score, and why is it important?

Why is your credit score so essential if employers and businesses will not need it to reject you?

Credit scores can be the difference between getting a mortgage, a credit card, or a vehicle or personal loan, and then they can help you receive better prices on all of them. Before issuing a price for coverage, insurance firms may also check your credit score.

“Having a good credit score saves you so much money,” said Beverly Harzog, a personal finance author and credit card expert for U.S. News & World Report. Low interest rates might make it simpler to keep up with payments, increasing your chances of maintaining a good credit score.

Exemptions from the regulation

Although the great majority of background checks do not contain your credit score, you may encounter an exception if you’re looking for a job in the financial sector or any profession that requires you to manage a lot of money.

However, you must grant written authorization for a background check in all situations, and the screeners must expressly state their aim to retrieve a credit report.

This is one another reason why you should take advantage of your free yearly credit report. You’ll be able to stay ahead of any inaccurate or fraudulent information if you keep a watch on your file.

What happens if you refuse to agree to a background check?


An employer or landlord will need your consent to do a background check, and you can always reject it.

If you do, your prospective employer or landlord has the authority to reject you for the job or lease. There are, however, restrictions in place that govern how broad a background check can be and what details can be provided. These state-by-state legislation are meant to prevent possible discrimination.

Information required in Background Check-

Let us look at the information required for a background check in short.

Companies look for the following details during the background verification procedure before giving a job:

Public records – Any law enforcement agency can quickly access your court records and criminal background.\Companies look at your previous job details, the dates you worked for them, your role in each company, your pay, performance history, and so on.Companies will contact your university to verify your educational credentials. Fraud degrees, certificates, and grades are the most common business fraud, thus this is a foregone conclusion.

Address check – After all, who would lie about their address? Those who are attempting to conceal their past.

Credit check(if required)- An individual’s credit check score plays a major role in this verification.

Background checks are conducted by background check partners who are affiliated with the company. The findings of background checks are kept completely confidential by the company and its background check partner.Each person involved in the process will have the opportunity to review and go over the information they are required to supply before the background check partner does the verification. Before conducting the background checks, the background check partners ensure that everyone participating in the process has agreed to the terms and conditions.

Does employment verification include a credit check?

Though in general a credit check is not required, still in certain cases it is included in pre-employment verification. This is usually the case when the job requires the person to handle money or work in the finance domain. The credit check plays a major role in his selection.

The ultimate question is, does a background check include your credit check? The answer is, background checks do not reveal credit check scores.

Former employers are contacted first when companies conduct background checks. The organization then looks for evidence of illicit conduct in public databases (criminal records). Your details are compared to that provided by your prior employer. They also check academic records for degrees and certificates.

Finally, the company will check the employee’s address. They may even send people to physically verify a candidate’s address. Normally, a credit check is not done (unless it’s related to finance).

Different Indian companies do background checks in different ways, such as. To carry out the steps outlined above, Third-party agencies are used by large private enterprises. Background checks are provided by companies such as Jantakhoj, First India Advantage, AuthBridge, and HireRight, in India.

Before offering a job, government businesses or PSUs do thorough background research which includes credit checks also for finance matters.

More information on background checks and credit checks-

Many businesses and employees misunderstand background checks, resulting in hiring or application problems. Let us look at some basic information:

  • There are no two background checks that are the same. Someone does not have to pass every type of background check before being hired by a company. Every job has its own set of specifications. Field salespeople and taxi drivers, for example, may require driving records, but office workers do not.
  • The majority of job applicants and workers feel that having a criminal record will hinder them from being employed. Every arrest does not result in a conviction. Their arrest does not imply that they are guilty.

Although background checking can go into every element of a person’s past, there may be a solution that doesn’t give your candidate’s character enough consideration. Finally, having a criminal past does not automatically disqualify you from employment.

  • There is a common misconception that only big firms have access to background and credit checks.

Whether it is a Fortune 500 corporation, a medium-sized company, or a small business, an employee background check and credit check are done in most cases, although some exceptions may exist. SMBs cannot afford to hire the wrong personnel. The employment of the wrong team is one of the most common causes of startup failure. The cost of a bad employee can be substantially greater than the expense of a background check.

  • Sometimes, Job seekers feel that companies have complete authority over background checks and that they have no say in the matter. However, a background check cannot be undertaken without the applicant’s permission. If a corporation decides not to hire a job applicant, it must explain why. A copy of the background check report is also sent to the applicant, who has the option of opposing it.
  • Apart from some credit checks, social media can also be checked.

Most of the companies you interview with nowadays will look at your social media accounts. Due to social media, employers can now readily map your interests, activities, and affiliations. This implies a hiring manager can get a sense of your personality without even bothering to meet you.

Have a photo on Facebook that you don’t like? It was captured! An irresponsible political remark on Twitter? That’s correct.

Employers currently prioritize hiring for culture fit, so any unusual activity that doesn’t make you a good fit will be rejected. Yeah, the internet background check process is a pain!

Summing up-

Background screening for recruitment is mandatory for Indian organizations with ISO 27001 certification. Although background screening can probe into every detail of a person’s past and credit check score, there may be a solution that doesn’t give enough thought to your candidate’s character. In the end, having a criminal record does not automatically mean you will not be hired.

It may take a long time for a company to conduct a background check on an applicant. The length of the records, the location of the papers, and local legislation are some of the factors that can influence the length of a background check. Employee background check service companies like MIMO require 30 percent less time than the companies themselves on average. That’s why companies may prefer these service companies for a background check.

There are no regulations prohibiting businesses from checking your social media accounts and enquiring about your credit check. However, your history, financial background with a credit check, and biometric data are all kept confidential. An employer can’t access it without your authorization.

Companies will scrutinize your background, legal or not if you’re a hotshot looking for a high position. Maybe, it is just too essential a role to take chances with.

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