Turning back? No worries.<\/p>\n\n\n\n
For the rest of you hardy souls though, let\u2019s get back to credit checking \u2026<\/p>\n\n\n\n
Why do recruitment agencies do credit checks?<\/h2>\n\n\n\nWhat is a credit check?<\/strong><\/h3>\n\n\n\nIn layperson\u2019s terms, a credit check involves pulling a report about the financial history<\/strong> of a person or company.
Credit reports (or credit files) cover a six year overview of loans, credit cards, mortgages and any other type of borrowing. They are typically used by lenders to see how financially responsible or healthy you are, thus helping them make decisions on your credit application.
But what does credit checking have to do with recruitment agencies?
Okay, as well as giving lenders confidence, the impact of credit reports can reach to the world of employment.
There are two instances when an agency might perform a credit check:
1. To vet candidates.
2. To vet potential clients.
Why exactly?
Simply, protection. Whether it\u2019s making sure that a candidate is financially healthy or ensuring that your recruitment agency gets paid<\/a>, credit checks give agencies (and employers) peace of mind. <\/p>\n\n\n\nWhat is a recruiter looking for in a credit report?<\/strong><\/h3>\n\n\n\nAgencies are looking for signs of financial mismanagement. This may include evidence of\u00a0County Court Judgements<\/a>\u00a0(CCJs), bankruptcy or any other adverse financial situation. They will then use this information to make an informed decision on a candidate, or even a potential client.\u00a0<\/p>\n\n\n\nWhat about the legality of credit checks? <\/strong><\/h3>\n\n\n\nIn the world of recruitment, the terms \u2018credit check\u2019 and \u2018credit report\u2019 are used interchangeably \u2013 something we\u2019ll discuss later. Credit scores are not available to view, however employers and recruitment agencies are free to pull a credit report PROVIDING THEY HAVE PERMISSION FROM THE HOLDER<\/strong>. <\/p>\n\n\n\nWhether it\u2019s making sure that a business will be able to pay up or ensuring that a candidate is financially healthy, credit checks give recruitment agencies (and employers) piece of mind.<\/p><\/blockquote><\/figure>\n\n\n\n
Consent will usually be attained during the recruitment process, however a candidate can decline this.<\/p>\n\n\n\n
As for a company background check, businesses are welcome to seek out information that\u2019s already in the public domain<\/strong>, such as data that\u2019s submitted to Companies House<\/a>. <\/p>\n\n\n\nAll checks should comply with Financial Conduct Authority<\/a> (FCA) standards. <\/p>\n\n\n\nCandidate credit checks: the basics<\/h2>\n\n\n\n
Depending on the job role or company, it\u2019s not that uncommon for candidates to be subjected to a credit check. While this might sound a little underhand, financial checks have become increasingly popular in many professions. <\/p>\n\n\n\n
Pre-employment screening<\/strong><\/h3>\n\n\n\nWhen a recruiter or employer pulls a candidate\u2019s credit report, this is usually as part of a wider pre-employment screening process, and, amongst many other things, will involve looking at a candidate\u2019s financial history.
Simply put, pre-employment screening is a background check<\/strong> that looks at aspects including:
Credit history.Criminal record.Personal information (DVLA, FCA, social media, etc).Identify fraud.<\/p>\n\n\n\nIn regards to actual credit checking, David Cole<\/a>, pre-employment screening specialist and founder of Better Vetting Limited, tells us that term is a little misleading:
\u201cThe term \u201ccredit check\u201d is a bit of a misnomer when related to UK background checks and many screening providers will actually use very different titles in an effort to avoid misinterpretation of the service, such as \u201cadverse financial,\u201d \u201cfinancial probity\u201d or \u201cconsumer search\u201d. Very little financial data can actually be revealed for employment purposes, unlike the credit checks consumers are exposed to when applying for credit.<\/em><\/p>\n\n\n\n![\"\"](\"https:\/\/www.agencycentral.co.uk\/articles\/wp-content\/uploads\/2022\/06\/What-information-is-in-a-candidates-credit-report.png\")
<\/figure>\n\n\n\nOkay, so we know why they\u2019re used, but which credit checking service should you choose?<\/strong><\/p>\n\n\n\nThere are countless screening services in the UK that offer credit checking, but David Cole believes that finding a service that carries out thorough identity checks is key:
\u201cEmployers should carefully select a service that will return results against all linked addresses, all previous names and aliases, and all addresses linked to aliases, in order to ensure that candidates are not trying to conceal adverse credit information from previous addresses. Not all credit checks are created equally and employers typically get what they are prepared to pay for. \u201c<\/em>
Is an employee credit check relevant for all roles?<\/strong>
Although pre-employment screening will be used for a whole range of vacancies, credit checks are mostly implemented when the role entails the management of money. Jobs in banking, accounting or management are therefore particularly prone to checks. <\/p>\n\n\n\nIt\u2019s important to state that an employee credit check WILL NOT have any effect on a candidate\u2019s credit score<\/p><\/blockquote><\/figure>\n\n\n\n
When hiring for finance-related jobs, employers may be interested in how candidates handle money in their personal lives. Obviously, a person\u2019s home life isn\u2019t necessarily a reflection of their professional capabilities, but peace of mind is much sought after when making any new hire.<\/p>\n\n\n\n
What if it isn\u2019t a finance-related job?<\/h3>\n\n\n\n
Companies typically have a lot of sensitive data \u2013 data that employees will probably have access to. Although a credit report can\u2019t tell you whether someone is trustworthy or not (something that we can\u2019t highlight enough), employers will certainly be interested in anything that might suggest an element of doubt over a candidate\u2019s character<\/strong>. <\/p>\n\n\n\nWill a credit check affect a candidate\u2019s credit score?<\/strong><\/h3>\n\n\n\nIt\u2019s important to state that an employee credit check WILL NOT have any effect on a candidate\u2019s credit score<\/strong>. Although it falls under the umbrella of a \u2018credit check,\u2019 it actually differs to what a lender would perform and doesn\u2019t carry the usual implications. <\/p>\n\n\n\nWhen submitting this type of report, credit companies are actually offering a different product from a standard credit check<\/strong>. Only the individual will be able to see that you\u2019ve carried out this check and won\u2019t be considered a factor when scores are calculated. <\/p>\n\n\n\nWhat is the value of candidate credit screening? <\/h2>\n\n\n\n
The main interest in a candidate\u2019s credit score stems from a need to find \u2018responsible\u2019 staff for a client. An agency\u2019s reputation is built on finding the very best candidates and pre-employment screening is intended to add another hoop for job seekers to jump through<\/strong>.
Basically, a poor financial background could imply a \u2018devil may care\u2019 recklessness. Presenting a candidate who may have a history of bankruptcy, if discovered by the employer, may not reflect well on the agency \u2013 especially if the employer then has to incur the cost of a bad hire<\/a>.
Of course, there\u2019s absolutely no evidence that being good with money automatically makes someone a better job applicant than someone with a hole in their wallet, but you get the point.
As a recruiter or employer, therefore, the question you have to ask yourself is: \u2018would I turn away the perfect candidate, if they had a bad credit report?\u2019<\/strong>. <\/p>\n\n\n\n![\"\"](\"https:\/\/www.agencycentral.co.uk\/articles\/wp-content\/uploads\/2022\/06\/Would-you-turn-away-a-candidate-who-has-a-poor-financial-history.png\")
<\/figure>\n\n\n\nAccording to our poll, it appears that the majority of recruiters and employers are able to look past a candidate\u2019s financial situation. <\/p>\n\n\n\n
Despite this, David Cole believes that information surrounding financial history shouldn\u2019t be undervalued when making a new hire: <\/p>\n\n\n\n
\u201cOne shouldn\u2019t overlook the importance of monitoring credit-related information, particularly in roles where employees will have access to lots of cash and \/ or to company or customer accounts. Just because there were no causes for concern when the candidate applied for the job does not mean that their personal circumstances could not drastically change and pose a risk to the business should they become desperate.\u201d<\/em><\/p>\n\n\n\nPerforming credit checks on clients<\/h2>\n\n\n\n
While it might be important to carry out candidate credit checks on behalf of your clients, what about the clients themselves?
Employers aren\u2019t the only ones that need protection and recruitment agencies may be wise to do a little digging (legally of course) on the businesses that approach them.
In early 2016, it was found that SMEs were owed \u00a3255 billion in late payments. The report by Zurich, showed that 53% of surveyed SMEs were waiting for overdue money<\/strong>, with two in five expressing that late payments are having a significant impact on cashflow. <\/p>\n\n\n\nIn early 2016, it was found that SMEs were owed \u00a3255 billion in late payments\u2026<\/p><\/blockquote><\/figure>\n\n\n\n
Therefore, with 85% of UK employment firms having fewer than 10 employees, can the recruitment sector afford to take on clients with a poor financial history?<\/p>\n\n\n\n
How to perform a client credit check<\/strong><\/h3>\n\n\n\nWell, the best way to look at the financial record of prospective clients is to sign up to one of the three main credit reference agencies in the UK.<\/p>\n\n\n\n
These are Experian Equifax and Call Credit.<\/p>\n\n\n\n
Signing up to any of these services comes with a fee, but will give recruiters access to information such as a client\u2019s credit limit and level of risk<\/strong>. <\/p>\n\n\n\nInformation is taken from lenders and public records, and though it can\u2019t guarantee that a company will pay-up, it\u2019ll show whether they\u2019re capable of doing so. <\/p>\n\n\n\n
Of course, if you don\u2019t want to go via an agency, you can always ask the company for a bank reference or go and visit them in person. <\/p>\n\n\n\n
How to deal with clients who have a poor credit score<\/h2>\n\n\n\n
Just because a client has a bad financial record, doesn\u2019t mean that you have to avoid working with them altogether. Of course, any decision to engage with such a client is completely at the risk of the agency<\/strong>, but there are methods that could offer some protection to your business. <\/p>\n\n\n\nGet clients to pay upfront<\/strong><\/h3>\n\n\n\nIt might seem obvious, but demanding payment upfront may be the best option for dealing with a client who has a bad credit history. <\/p>\n\n\n\n
While not all employers will be so enamored with the idea of paying for a service in advance, the danger of having the service withdrawn completely may leave them with little option.<\/p>\n\n\n\n
Alternatively (but along the same lines) you could request a percentage of the fee upfront<\/strong>. Though this won\u2019t guarantee full payment, ensuring that you receive some of the cost will at least provide some protection to your agency. <\/p>\n\n\n\nUse a factoring service<\/strong><\/h3>\n\n\n\nIf cashflow is a problem, recruiters could choose to approach a factoring firm<\/strong> to chase the debt.
Factoring is a type of finance whereby a business (a recruitment agency in this case) will sell invoices to a third party for a discounted price. The third party will then chase the full invoice fee from the client (employer). <\/p>\n\n\n\nDepending on the job being filled and the potential financial reward on offer, it may actually make more sense to take the risk rather than go through the expense and rigmarole of doing a background check.<\/p><\/blockquote><\/figure>\n\n\n\n
This ensures that the agency receives money and that the factoring company makes a profit. <\/p>\n\n\n\n
Advantages of recruitment agencies using factoring<\/em><\/h4>\n\n\n\n\n- Quick injection of cash.<\/li>\n\n\n\n
- Saves time.<\/li>\n\n\n\n
- Can avoid ongoing disputes with clients.<\/li>\n<\/ul>\n\n\n\n
Disadvantages of factoring debt<\/em><\/h4>\n\n\n\n\n- A reduced profit.<\/li>\n\n\n\n
- Lose some control of the payment process.<\/li>\n\n\n\n
- Clients may prefer to deal with you directly, thus damaging relationships.<\/li>\n<\/ul>\n\n\n\n
Should you take the risk on a client with a poor credit history?<\/strong><\/h3>\n\n\n\nIt may sound abrupt, but sometimes, you might just have to bite the bullet if a client has a poor credit history. There are no guarantees in recruitment, be that finding the ideal candidate or getting paid for finding that candidate.
Depending on the job being filled and the potential financial reward on offer, it may actually make more sense to take the risk rather than go through the expense and rigmarole of doing a background check.
Sure, more lucrative requirements may justify a little digging, but you could probably take the chance on a menial temp job. <\/p>\n\n\n\n
What should you take away from this article? <\/h2>\n\n\n\n
Credit checking, while incapable of painting a full picture of a client or candidate, can help agencies make informed decisions about who to work with.
It\u2019s important to note though, that financial information should form only part of the decision making process and not be the be all and end all. Just because a candidate has some outstanding debts doesn\u2019t make them a bad candidate, and just because a client is considered \u2018risky\u2019 doesn\u2019t mean that you should turn them away.
Everything should be done on a case by case basis.
So whether you\u2019re a new consultant improving your skills<\/a> or a long established agency, background checks are worthwhile, but remember that there\u2019s more to a person or company than just the bottom line. <\/p>\n\n\n\n<\/a><\/a><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"We discuss all things recruitment credit checks, including why agencies should do them, whether candidates need to be credit screened and how to deal with clients that have a bad financial history. <\/p>\n","protected":false},"author":2,"featured_media":1003,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1002","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorised"],"_links":{"self":[{"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/posts\/1002","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/comments?post=1002"}],"version-history":[{"count":7,"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/posts\/1002\/revisions"}],"predecessor-version":[{"id":2394,"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/posts\/1002\/revisions\/2394"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/media\/1003"}],"wp:attachment":[{"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/media?parent=1002"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/categories?post=1002"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/tags?post=1002"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
In layperson\u2019s terms, a credit check involves pulling a report about the financial history<\/strong> of a person or company. Agencies are looking for signs of financial mismanagement. This may include evidence of\u00a0County Court Judgements<\/a>\u00a0(CCJs), bankruptcy or any other adverse financial situation. They will then use this information to make an informed decision on a candidate, or even a potential client.\u00a0<\/p>\n\n\n\n In the world of recruitment, the terms \u2018credit check\u2019 and \u2018credit report\u2019 are used interchangeably \u2013 something we\u2019ll discuss later. Credit scores are not available to view, however employers and recruitment agencies are free to pull a credit report PROVIDING THEY HAVE PERMISSION FROM THE HOLDER<\/strong>. <\/p>\n\n\n\n Whether it\u2019s making sure that a business will be able to pay up or ensuring that a candidate is financially healthy, credit checks give recruitment agencies (and employers) piece of mind.<\/p><\/blockquote><\/figure>\n\n\n\n Consent will usually be attained during the recruitment process, however a candidate can decline this.<\/p>\n\n\n\n As for a company background check, businesses are welcome to seek out information that\u2019s already in the public domain<\/strong>, such as data that\u2019s submitted to Companies House<\/a>. <\/p>\n\n\n\n All checks should comply with Financial Conduct Authority<\/a> (FCA) standards. <\/p>\n\n\n\n Depending on the job role or company, it\u2019s not that uncommon for candidates to be subjected to a credit check. While this might sound a little underhand, financial checks have become increasingly popular in many professions. <\/p>\n\n\n\n When a recruiter or employer pulls a candidate\u2019s credit report, this is usually as part of a wider pre-employment screening process, and, amongst many other things, will involve looking at a candidate\u2019s financial history. In regards to actual credit checking, David Cole<\/a>, pre-employment screening specialist and founder of Better Vetting Limited, tells us that term is a little misleading: Okay, so we know why they\u2019re used, but which credit checking service should you choose?<\/strong><\/p>\n\n\n\n There are countless screening services in the UK that offer credit checking, but David Cole believes that finding a service that carries out thorough identity checks is key: It\u2019s important to state that an employee credit check WILL NOT have any effect on a candidate\u2019s credit score<\/p><\/blockquote><\/figure>\n\n\n\n When hiring for finance-related jobs, employers may be interested in how candidates handle money in their personal lives. Obviously, a person\u2019s home life isn\u2019t necessarily a reflection of their professional capabilities, but peace of mind is much sought after when making any new hire.<\/p>\n\n\n\n Companies typically have a lot of sensitive data \u2013 data that employees will probably have access to. Although a credit report can\u2019t tell you whether someone is trustworthy or not (something that we can\u2019t highlight enough), employers will certainly be interested in anything that might suggest an element of doubt over a candidate\u2019s character<\/strong>. <\/p>\n\n\n\n It\u2019s important to state that an employee credit check WILL NOT have any effect on a candidate\u2019s credit score<\/strong>. Although it falls under the umbrella of a \u2018credit check,\u2019 it actually differs to what a lender would perform and doesn\u2019t carry the usual implications. <\/p>\n\n\n\n When submitting this type of report, credit companies are actually offering a different product from a standard credit check<\/strong>. Only the individual will be able to see that you\u2019ve carried out this check and won\u2019t be considered a factor when scores are calculated. <\/p>\n\n\n\n The main interest in a candidate\u2019s credit score stems from a need to find \u2018responsible\u2019 staff for a client. An agency\u2019s reputation is built on finding the very best candidates and pre-employment screening is intended to add another hoop for job seekers to jump through<\/strong>. According to our poll, it appears that the majority of recruiters and employers are able to look past a candidate\u2019s financial situation. <\/p>\n\n\n\n Despite this, David Cole believes that information surrounding financial history shouldn\u2019t be undervalued when making a new hire: <\/p>\n\n\n\n \u201cOne shouldn\u2019t overlook the importance of monitoring credit-related information, particularly in roles where employees will have access to lots of cash and \/ or to company or customer accounts. Just because there were no causes for concern when the candidate applied for the job does not mean that their personal circumstances could not drastically change and pose a risk to the business should they become desperate.\u201d<\/em><\/p>\n\n\n\n While it might be important to carry out candidate credit checks on behalf of your clients, what about the clients themselves? In early 2016, it was found that SMEs were owed \u00a3255 billion in late payments\u2026<\/p><\/blockquote><\/figure>\n\n\n\n Therefore, with 85% of UK employment firms having fewer than 10 employees, can the recruitment sector afford to take on clients with a poor financial history?<\/p>\n\n\n\n Well, the best way to look at the financial record of prospective clients is to sign up to one of the three main credit reference agencies in the UK.<\/p>\n\n\n\n These are Experian Equifax and Call Credit.<\/p>\n\n\n\n Signing up to any of these services comes with a fee, but will give recruiters access to information such as a client\u2019s credit limit and level of risk<\/strong>. <\/p>\n\n\n\n Information is taken from lenders and public records, and though it can\u2019t guarantee that a company will pay-up, it\u2019ll show whether they\u2019re capable of doing so. <\/p>\n\n\n\n Of course, if you don\u2019t want to go via an agency, you can always ask the company for a bank reference or go and visit them in person. <\/p>\n\n\n\n Just because a client has a bad financial record, doesn\u2019t mean that you have to avoid working with them altogether. Of course, any decision to engage with such a client is completely at the risk of the agency<\/strong>, but there are methods that could offer some protection to your business. <\/p>\n\n\n\n It might seem obvious, but demanding payment upfront may be the best option for dealing with a client who has a bad credit history. <\/p>\n\n\n\n While not all employers will be so enamored with the idea of paying for a service in advance, the danger of having the service withdrawn completely may leave them with little option.<\/p>\n\n\n\n Alternatively (but along the same lines) you could request a percentage of the fee upfront<\/strong>. Though this won\u2019t guarantee full payment, ensuring that you receive some of the cost will at least provide some protection to your agency. <\/p>\n\n\n\n If cashflow is a problem, recruiters could choose to approach a factoring firm<\/strong> to chase the debt. Depending on the job being filled and the potential financial reward on offer, it may actually make more sense to take the risk rather than go through the expense and rigmarole of doing a background check.<\/p><\/blockquote><\/figure>\n\n\n\n This ensures that the agency receives money and that the factoring company makes a profit. <\/p>\n\n\n\n It may sound abrupt, but sometimes, you might just have to bite the bullet if a client has a poor credit history. There are no guarantees in recruitment, be that finding the ideal candidate or getting paid for finding that candidate. Credit checking, while incapable of painting a full picture of a client or candidate, can help agencies make informed decisions about who to work with. <\/a><\/a><\/a><\/p>\n","protected":false},"excerpt":{"rendered":" We discuss all things recruitment credit checks, including why agencies should do them, whether candidates need to be credit screened and how to deal with clients that have a bad financial history. <\/p>\n","protected":false},"author":2,"featured_media":1003,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1002","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorised"],"_links":{"self":[{"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/posts\/1002","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/comments?post=1002"}],"version-history":[{"count":7,"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/posts\/1002\/revisions"}],"predecessor-version":[{"id":2394,"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/posts\/1002\/revisions\/2394"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/media\/1003"}],"wp:attachment":[{"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/media?parent=1002"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/categories?post=1002"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.agencycentral.co.uk\/articles\/wp-json\/wp\/v2\/tags?post=1002"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
Credit reports (or credit files) cover a six year overview of loans, credit cards, mortgages and any other type of borrowing. They are typically used by lenders to see how financially responsible or healthy you are, thus helping them make decisions on your credit application.
But what does credit checking have to do with recruitment agencies?
Okay, as well as giving lenders confidence, the impact of credit reports can reach to the world of employment.
There are two instances when an agency might perform a credit check:
1. To vet candidates.
2. To vet potential clients.
Why exactly?
Simply, protection. Whether it\u2019s making sure that a candidate is financially healthy or ensuring that your recruitment agency gets paid<\/a>, credit checks give agencies (and employers) peace of mind. <\/p>\n\n\n\nWhat is a recruiter looking for in a credit report?<\/strong><\/h3>\n\n\n\n
What about the legality of credit checks? <\/strong><\/h3>\n\n\n\n
Candidate credit checks: the basics<\/h2>\n\n\n\n
Pre-employment screening<\/strong><\/h3>\n\n\n\n
Simply put, pre-employment screening is a background check<\/strong> that looks at aspects including:
Credit history.Criminal record.Personal information (DVLA, FCA, social media, etc).Identify fraud.<\/p>\n\n\n\n
\u201cThe term \u201ccredit check\u201d is a bit of a misnomer when related to UK background checks and many screening providers will actually use very different titles in an effort to avoid misinterpretation of the service, such as \u201cadverse financial,\u201d \u201cfinancial probity\u201d or \u201cconsumer search\u201d. Very little financial data can actually be revealed for employment purposes, unlike the credit checks consumers are exposed to when applying for credit.<\/em><\/p>\n\n\n\n<\/figure>\n\n\n\n
\u201cEmployers should carefully select a service that will return results against all linked addresses, all previous names and aliases, and all addresses linked to aliases, in order to ensure that candidates are not trying to conceal adverse credit information from previous addresses. Not all credit checks are created equally and employers typically get what they are prepared to pay for. \u201c<\/em>
Is an employee credit check relevant for all roles?<\/strong>
Although pre-employment screening will be used for a whole range of vacancies, credit checks are mostly implemented when the role entails the management of money. Jobs in banking, accounting or management are therefore particularly prone to checks. <\/p>\n\n\n\nWhat if it isn\u2019t a finance-related job?<\/h3>\n\n\n\n
Will a credit check affect a candidate\u2019s credit score?<\/strong><\/h3>\n\n\n\n
What is the value of candidate credit screening? <\/h2>\n\n\n\n
Basically, a poor financial background could imply a \u2018devil may care\u2019 recklessness. Presenting a candidate who may have a history of bankruptcy, if discovered by the employer, may not reflect well on the agency \u2013 especially if the employer then has to incur the cost of a bad hire<\/a>.
Of course, there\u2019s absolutely no evidence that being good with money automatically makes someone a better job applicant than someone with a hole in their wallet, but you get the point.
As a recruiter or employer, therefore, the question you have to ask yourself is: \u2018would I turn away the perfect candidate, if they had a bad credit report?\u2019<\/strong>. <\/p>\n\n\n\n<\/figure>\n\n\n\nPerforming credit checks on clients<\/h2>\n\n\n\n
Employers aren\u2019t the only ones that need protection and recruitment agencies may be wise to do a little digging (legally of course) on the businesses that approach them.
In early 2016, it was found that SMEs were owed \u00a3255 billion in late payments. The report by Zurich, showed that 53% of surveyed SMEs were waiting for overdue money<\/strong>, with two in five expressing that late payments are having a significant impact on cashflow. <\/p>\n\n\n\nHow to perform a client credit check<\/strong><\/h3>\n\n\n\n
How to deal with clients who have a poor credit score<\/h2>\n\n\n\n
Get clients to pay upfront<\/strong><\/h3>\n\n\n\n
Use a factoring service<\/strong><\/h3>\n\n\n\n
Factoring is a type of finance whereby a business (a recruitment agency in this case) will sell invoices to a third party for a discounted price. The third party will then chase the full invoice fee from the client (employer). <\/p>\n\n\n\nAdvantages of recruitment agencies using factoring<\/em><\/h4>\n\n\n\n
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Disadvantages of factoring debt<\/em><\/h4>\n\n\n\n
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Should you take the risk on a client with a poor credit history?<\/strong><\/h3>\n\n\n\n
Depending on the job being filled and the potential financial reward on offer, it may actually make more sense to take the risk rather than go through the expense and rigmarole of doing a background check.
Sure, more lucrative requirements may justify a little digging, but you could probably take the chance on a menial temp job. <\/p>\n\n\n\nWhat should you take away from this article? <\/h2>\n\n\n\n
It\u2019s important to note though, that financial information should form only part of the decision making process and not be the be all and end all. Just because a candidate has some outstanding debts doesn\u2019t make them a bad candidate, and just because a client is considered \u2018risky\u2019 doesn\u2019t mean that you should turn them away.
Everything should be done on a case by case basis.
So whether you\u2019re a new consultant improving your skills<\/a> or a long established agency, background checks are worthwhile, but remember that there\u2019s more to a person or company than just the bottom line. <\/p>\n\n\n\n