credit checks - vs. - your job search or contract application

Due Diligence and Compliance Credit Checks - Versus - Your Job Search or Contract Application This article by Augustus Hall Limited does a good job of explaining the issues important to you as a job seeker, career person or currently in an employment where appraisals are key to your promotion (mostly when you work in a public sector, an organized private sector or a multinational in Nigeria). Augustus Hall Limited (RC. 912580) www.augustushall.com

http://www.augustushall.com/

Augustus Hall Limited (RC. 912580) | www.augustushall.com

2

2 Credit Checks - Vs. - Your Job Search or Contract Application

Table of Contents Credit Checks - Vs. - Your Job Search or Contract Application ..................................................................... 4


4


Credit Checks - Vs. - Your Job Search or Contract Application

I would just narrow it down to job search and employments or employment appraisals for now, may be later in subsequent editions we may discuss the contract application.

You can have the perfect resume, use the Hidden Job Market to get ahead of the curve, and gain an advantage over your competition. Even with all this, if you’ve got credit problems or debt related issue, it can affect your ability to get an offer from certain employers.

But it’s a murky issue – most of you don’t know how credit checks are used or what kind of credit checks are used for employment background checks. What can affect your eligibility for employers who use credit checks? What won’t matter?

This article by Augustus Hall Limited does a good job of explaining the issues important to you as a job seeker, career person or currently in an employment where appraisals are key to your promotion (mostly when you work in a public sector, an organized private sector or a multinational in Nigeria).

At Augustus Hall Limited, we conduct several background checks and due diligence that include credit etc. for all new and prospective job finalists and also on current employee as demanded by the Client.

Scenario 1:

After three rounds of interviews for a Top sales position with an XYZ Insurance Co., Patricia (actual name reserved) received a letter in February saying her job application was denied based on information from a background check she authorized the company to conduct. The only blemish on her record, she says: Poor credit that built up since she lost her job two years ago.

Unemployed and in debt, Patricia is among a growing number of job hunters who find their

financial past interfering with their professional futures.

Concerned about rising rates of employee theft, employee integrity, employee financial discipline and fiduciary issues, more employers in Nigeria today are conducting credit background checks on applicants for some positions –even on current employees in various scales. Companies say the financial information from such credit checks can offer insight into a candidate’s or current

Sure we’ve all heard that your credit can affect your eligibility for

certain jobs or contract application. As a Due Diligence service

provider, we had a number of clients who ran credit checks on near-

finalist for certain positions and contract applications, before

extending an official offer (a few ran credit check for some existing

staff mostly those in sensitive positions, while others simply did for

every position)


5


employee’s level of responsibility. But people whose previously solid credit has been damaged by the economic downturn say they are victims of circumstances beyond their control.

Patricia believes her credit woes lost her the opportunity at XYZ Insurance Co. A company spokeswoman said XYZ Insurance Co., doesn’t comment on specific job applicants but that each candidate authorizes the company to conduct a background check, which may or may not include a credit check.

A 49-year-old single mother of three, Patricia fell behind on her Credit/Loan and other outstanding bills a handful of months after losing her job as a Lagos office manager for an Oil and Gas company in early 2008. Patricia is now searching for positions outside financial services, believing other industries will be more tolerant of her debt.

Employers have the right to conduct background checks on current and potential employees through third-party companies, with the individual’s approval. Some 47% of employers say they check the credit history of applicants or current employees for certain positions, according to a survey of more than 430 organizations in Nigeria in late 2011.

That’s up from 42% of employers in 2009. Just 25% of employers in 2008 said they regularly or sometimes checked applicants’ credit histories.

Companies typically look back over a period of years for patterns in applicants’ or current employee’s behavior. It’s a longer-term snapshot to see if that’s indicative of fiscal responsibility,’ they concluded.

The vast majority of employers in Nigeria who conduct credit background checks do so for jobs with fiduciary or financial responsibility, such as accounting, budgeting or those involving cash or sensitive IT information, sensitive decision making roles, sensitive credit information, sensitive leadership roles, etc. Nearly half the respondents also consider the financial stress, outstanding debts or credit of candidates for senior executive positions.

These Nigeria companies also look at Lawsuits or other judgments outstanding against the prospective candidate whether an applicant or a current employee, or multiple accounts in debt collection or accounts referred to a debt collection agent, and other types of credit information most likely to keep an organization from extending a job offer, according to the survey.


6


Scenario 2:

An XYZ Engineering Consultancy Firm had its first encounter with a candidate’s poor credit last year. An advanced level student applying for a summer part-time slot in Nigeria had a history of unpaid bills and bounced checks. The XYZ Engineering Consultancy Firm decided to bypass the candidate immediately. If he had been a candidate for a full-time position, ‘we may have spent more time and energy’ examining the circumstances, the XYZ Engineering Consultancy Firm says.

Credit Reports

Knowing what is on your credit report and offering an explanation for debt caused by a specific event could keep negative information away from derailing your employment chances.

Certain factors that could hurt your credit score, such as a recently reduced credit-card credit limit, reduced overdraft limit, credit-line limit etc., would be likely to hurt your job prospects. Employers focus on issues like debt collections and default issues not resolved by the prospective applicant or the current employee.

You might be tempted not to sign a waiver allowing for a potential employer to conduct a background and credit check. But refusing is likely a deal breaker, career counselors say. Employers will assume you are hiding a serious problem, and in today’s Nigeria job market, they won’t have trouble finding a more forthcoming candidate. Most employers don’t seek permission for a background check until they’ve narrowed down the pool of candidates to a group of finalists, or have made an offer contingent on such a check.

‘You really need to explain your circumstances,’ …we also suggest explaining the circumstances surrounding the negative information that will turn up and the steps you took to address the situation before employers run a check. ‘No one likes a surprise,’…

Critics of the credit checks say they create a vicious cycle that prevents those who most need jobs from getting them. Moreover, more companies now make use of credit checks during the hiring or firing process, with certain exceptions.

First, be sure you understand what employers

can see on a credit check and make sure you

understand your credit report so you can

explain any problem areas. Employers receive

credit report and credit score, from consumer

reporting companies.

A Credit Report includes debt(s) you owe, your

outstanding, bill/debt-paying history, number

and types of accounts, how long you’ve had

them, and whether you’ve been sued or have

filed for bankruptcy, among other factors,

Information can go back 7 years – or 10 for

bankruptcies.

Credit Scores, on the other hand, are used by

HR and many others to know if you are

financially responsible and also to observe if

you are under financial stress/pressure. Apart

from that it’s majorly used by lenders to

determine if you are financially worthy of a

loan.


7


Conclusion

Also we advise applicants or employees to request for their Credit Reports, if a company says it didn’t hire you or just wouldn’t need your services in the company anymore because of your credit history…however, in so many instances/cases these companies hardly tell you the reason for taking their actions and you are left wondering.

If you find mistakes, alert the credit-reporting bureaus and creditors in writing. The process takes time, so review your history at least a month or two before you expect employers, or lenders, to request it

credit checks - vs. - your job search or contract application

Documents

job search

kind of credit checks

compliance credit checks

credit problems

good job

job seeker

employment background

hidden job market