Employees are the biggest contributors to a business’s overall productivity and growth. It has become common practice today for employers to conduct background and reference checks to ensure that they hire and retain quality talent. Pre-employment screening is an effective way to safeguard the company and existing employees’ interests by reducing the risk of making bad hiring decisions.
Why credit report plays a part in background screening
A credit report is a comprehensive record of a person’s credit payment history compiled from different retail banks and major financial institutions, and here’s where Credit Bureau Singapore (CBS) comes in. It collects this credit data from its participating members and allows an employer to make use of the credit report to assess a potential candidate’s financial standing and criminal records (if any). The employer can also refer to some indicators in the credit report to assess the candidate’s creditworthiness, such as:
- Most Recent 12 Months Account Status History
- Previous Enquiry
- Default Records
- Bankruptcy Proceedings
- Bureau Score
- Narratives
- Aggregated Outstanding Balances
- Aggregated Monthly Instalments
Here’s how you can read a credit report and understand the common misconceptions of such reports.
With the advancement of smart digital technologies today, consumers in Singapore can easily apply for a credit facility or take up additional loans in Singapore without being physically present at a bank. The application process has been streamlined to simple clicks on a mobile app, with quick approvals from the bank within a day or even minutes.
With such easy access to credit and loans these days, employers run higher risks of hiring candidates who might be in financial distress. Incorporating credit report reviews as part of the background screening can help them make better informed hiring decisions. For instance, bad debt records can be easily recognised through the credit score as displayed in the credit report or through other indicators like unsecured outstanding balances and default records. With this in place, candidates with severe debt records can be deflected to protect the employer against potential misconduct or in the worst-case scenario, malicious acts that blemish the company’s reputation. On the other hand, a potential hire who shows financial stability through his credit report will boost hiring confidence and portray a more trustworthy and reliable image.
For companies in the banking and finance industry, it is not an unusual practice to incorporate credit report checks in assessing potential hires due to the job’s highly sensitive nature of handling large financial accounts and high net-worth clients. In recent years, CBS has also seen increasing interest from employers beyond the finance industry enquiring on employees’ credit reports for employment screening, to ensure the right hire has been made for the job.
Where to get a copy of your credit report
To check your credit score, you can purchase a copy of your credit report at the CBS website. You can also view a sample credit report with detailed explanations here, and learn more fun and useful tips to maintain a good credit reputation on the CBS Facebook Page.
This article is contributed by Credit Bureau Singapore.
