1. SHRM Survey Findings:
Background Checking—The Use of Credit
Background Checks in Hiring Decisions
July 19, 2012
The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012

2. Key Findings
 What are the most important factors influencing the final decision to hire a particular job
candidate over another? The three most important factors that influence the final decision to hire
one candidate over another are 1) previous work experience, 2) a good fit with the job and the
organization, and 3) specific skills expertise needed for the job.
 Do organizations conduct credit background checks on job candidates? Slightly more than one-half
(53%) of organizations do not conduct credit background checks on any of their job candidates. This
represents a large decrease in the use of credit background checks: in 2010, only 40% did not
conduct credit background checks, and in 2004, this percentage was 39%. Thirty-four percent of
organizations reported that they conduct credit checks on select job candidates and only 13%
conduct credit checks on all job candidates.
 When do organizations initiate credit background checks? Of the organizations that conduct credit
background checks, most organizations initiate credit background checks after a contingent job
offer (58%) or after the job interview (33%). Very few organizations (2%) initiate credit background
checks before a job interview.
 Why do organizations conduct credit background checks? The top two reasons organizations
conduct credit checks on job candidates are 1) to reduce/prevent theft and embezzlement (45%)
and 2) to reduce legal liability for negligent hiring (22%).
The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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3. Key Findings
 On which category of job candidates do organizations conduct credit background checks? Of the
organizations that conduct background checks on select job candidates (34%), 87% conduct credit
checks on candidates applying for positions with financial responsibilities, 42% on candidates
applying for senior executive positions and 34% on candidates for positions with access to highly
confidential employee information.
 Do organizations hire job candidates whose credit reports contain information that presents their
financial situation negatively? 80% of organizations reported that they have hired a job candidate
whose credit report contained information that reflects negatively on the candidate’s financial
situation, suggesting that negative credit information is not often a barrier to hiring.
 How many years of credit history are organizations interested in? Overall, most organizations that
use credit checks focus on credit history of two to seven years. Twenty-one percent of organizations
reported that two to three years were most influential in their assessment of a job candidate’s
credit standing, 27% reported four to five years were most influential, and 31% reported up to
seven years were most influential in their assessment of a candidate’s credit standing. Only 6% of
organizations indicated that all years of credit history were equally important, a decrease from 17%
in 2010.
 Do organizations allow job candidates to explain the results of credit checks? Yes; 64% of
organizations allow job candidates to explain the results of their credit checks before the decision
to hire or not to hire is made, and 28% allow job candidates to explain the results after the decision
to hire or not to hire is made.
The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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4. In general, when making a hiring decision about a job candidate, which
are the most important factors influencing the final decision to hire a
particular candidate over another?
Previous work experience directly applicable to the 87%
job 82%
A good fit with the job and organization 86%
85%
Specific skills expertise needed for the job 78%
(e.g., technical skills, communication skills) 80%
Performance during the interview (e.g., professional 78%
demeanor, good communication skills) 67%
Favorable reference background check results 60%
(e.g., verification of employment history) 47%
Education directly applicable to the job 60%
35%
Favorable criminal background check results 59%
(e.g., criminal history) 44%
Certifications directly applicable to the job 51%
(e.g., CPA, PHR, PMP) 29%
Favorable credit background check results 2012 (n = 385)
14%
(e.g., credit history) 9% 2010 (n = 518)
Note: Percentages do not equal 100% due to multiple response options.
The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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5. In general, when making a hiring decision about a job candidate, which
are the most important factors influencing the final decision to hire a
particular candidate over another?
Comparisons by organization sector
Nonprofit organizations are more likely than privately owned for-profit organizations to select favorable reference background
check results as the most important factor influencing the final decision to hire a particular candidate over another.
Comparisons by organization sector
Nonprofit (74%) > Privately owned for-profit (55%)
Note: Only statistically significant differences are shown. The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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6. Does your organization, or an agency hired by your organization,
conduct credit background checks for any job candidates?
No, my organization does not conduct this 53%
type of background check on any of its job
candidates 40%
34% 2012 (n = 430)
Select job candidates
47% 2010 (n = 343)
13%
All job candidates
13%
Note: Respondents who answered “not sure” were excluded from this analysis.
The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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7. Does your organization, or an agency hired by your organization,
conduct credit background checks for any job candidates?
Comparisons by organization staff size
Organizations with 2,500 to 24,999 employees are more likely than organizations with 100 to 499 employees to conduct credit
background checks for select job candidates.
Comparisons by organization staff size
2,500 to 24,999 employees (45%) > 100 to 499 employees (25%)
Note: Only statistically significant differences are shown. The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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8. The Use of Credit Background Checks
A Comparative Look: 2012, 2010 and 2004
2012 2010 2004
Does your organization, or an Does your organization, or an In general, how frequently does
agency hired by your organization, agency hired by your organization, your organization, or an agency
conduct credit background checks conduct credit background checks hired by your organization, check
for any job candidates by for any job candidates by any of the following references for
reviewing the candidates’ reviewing the candidates’ its job candidates? Credit Checks
consumer reports? consumer reports?
*Survey margin of error: +/- 4% *Survey margin of error: +/- 5% *Survey margin of error: +/- 5%
All job candidates (13%) All job candidates (13%) Always (19%)
Select job candidates (34%) Select job candidates (47%) Sometimes (24%)
Rarely (18%) 42%
No (53%) No (40%) Never (39%)
Note: n = 430. Respondents who answered “not Note: n = 343. Respondents who answered “not Note: n = 296. Respondents who answered “don’t
sure” were excluded from this analysis. sure” were excluded from this analysis. know” were excluded from this analysis.
Source: SHRM Background Checking Survey— Source: SHRM Background Checking Survey — Source: SHRM Reference and Background
Credit Checks (2012) Credit Checks (2010) Checking Survey (2004)
The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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9. When does your organization, or any agency hired by your organization,
initiate credit background checks on job candidates?
58%
After a contingent job offer
57%
33%
After a job interview but before a job offer
30%
3%
Varies by job level
9%
2012 (n = 171)
After the completion of a job application but 2%
before a job interview 2010 (n = 199)
3%
4%
Other
1%
The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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10. What is the primary reason your organization conducts credit
background checks on job candidates?
To reduce/prevent theft and embezzlement, other criminal 45%
activity 54%
22%
To reduce legal liability for negligent hiring
27%
19%
To assess the overall trustworthiness of the job candidate
12%
To comply with applicable state law requiring a background
7%
check for a particular position (e.g., day care
7%
teachers, licensed medical practitioners)
To comply with credit card processor standards (PCI)** 3%
Other 4%
2012 (n = 162)
2010 (n = 195)
Note: ** Response option was not available in 2010.
The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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11. Has your organization ever hired a job candidate with information on his
or her credit report that presented the job candidate’s financial situation
negatively?
No, 20%
Yes, 80%
Note: n = 101. Respondents who answered “not sure” were excluded from this analysis.
The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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12. In general, when conducting a credit background check on job
candidates, how many years of credit history are most influential in
your assessment of the job candidate’s credit standing?
Up to 10 years or more 8%
5%
Up to 8-9 years 4%
3%
31%
Up to 6-7 years 33%
Up to 4-5 years 27%
27%
Up to 2-3 years 21%
14% 2012 (n = 157)
Up to 1 year 2% 2010 (n = 230)
0%
All years are equally important 6% 17%
Note: The data in this chart represent organizations that conduct credit background checks on select or all job candidates. Respondents were asked to round
up to the highest year. Percentages do not equal 100% due to rounding.
The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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13. When conducting credit background checks on job candidates, in general,
how many years of credit history does your organization check for?
10 years 8-9 6-7 4-5 2-3
1 year
or more years years years years
Executive/upper 2012 33% 6% 43% 16% 2% 0%
management (e.g.,
CEO, CFO) 2010 23% 11% 50% 16% 0% 0%
Other management 2012 29% 6% 48% 13% 4% 0%
(e.g., directors,
managers) 2010 16% 11% 55% 18% 0% 0%
2012 23% 4% 53% 15% 4% 0%
Nonmanagement
salaried employees
2010 14% 12% 56% 16% 2% 0%
2012 24% 4% 49% 18% 4% 0%
Nonmanagement
hourly employees
2010 14% 12% 55% 17% 2% 0%
Note: n = 45 - 49. The data in this table represent organizations that conduct credit background checks on all job candidates. Respondents were asked to round up
to the highest year. Percentages may not equal 100% due to rounding.
The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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14. Does your organization allow job candidates, in certain circumstances,
the opportunity to explain the results of their consumer report that
might have an adverse effect on an employment decision (e.g., high
debt, bankruptcy)?
Yes, after the credit background check is 64%
conducted but before the decision to hire or not
hire is made 65%
28%
Yes, after the decision to hire or not hire has
been made
22%
2012 (n = 168)
2010 (n = 197)
8%
No, not at any time
13%
The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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15. Credit Background Checks
Conducted on Select Job Candidates
The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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16. On which category of job candidates does your organization conduct
credit background checks?
Job candidates for positions with fiduciary and financial responsibility (e.g., handling 87%
cash, banking, accounting, compliance, technology) 91%
Job candidates for senior executive positions (e.g., CEO, CFO, CHRO) 42%
46%
Job candidates who will have access to highly confidential employee information 34%
(e.g., salary, benefits, medical information or other personal information about… 34%
Job candidates who will have access to company or other people's property or 25%
otherwise placed in a position of financial trust (e.g., IT, admin. services) 30%
Job candidates who will have security responsibilities (e.g., security guards) 11%
9%
Job candidates for positions for which state law requires a background check 2012 (n = 146)
10%
(e.g., day care teachers, licensed medical practitioners) 11% 2010 (n = 158)
Job candidates who will be employed in safety-sensitive positions (including operating 6%
heavy equipment, transportation, etc.) 5%
Job candidates for positions involving national defense or homeland security 5%
8%
Job candidates who will work with children, the elderly, the disabled and other 2%
vulnerable populations 3%
Job candidates who will work in health care or with access to drugs 1%
(e.g., hospitals, nursing homes, clinics, pharmacies, rehabilitation centers) 3%
Other 6%
4%
Note: The data in this figure represent organizations that conduct credit background checks on select job candidates. Percentages do not equal 100% due to
multiple response options.
The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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17. In general, after conducting credit background checks, if information
that presented the job candidate’s financial situation negatively were
discovered, what information is MOST likely to affect your decision to
NOT extend a job offer?
Accounts in Current
High debt-to- Medical- Education-
debt outstanding Bankruptcy Tax liens Foreclosures
income ratio related debt related debt
collection judgment(s)
Job candidates for positions for which
applicable state law requires a background
61% 18% 9% 3% 3% 3% 3% 0%
check (e.g., day care teachers, licensed medical
practitioners) (n = 33)
Job candidates who will work in health care or
with access to drugs (e.g., hospitals, nursing
57% 13% 13% 4% 0% 9% 4% 0%
homes, clinics, pharmacies, rehabilitation
centers) (n = 23)
Job candidates for positions involving national
52% 9% 13% 17% 4% 0% 4% 0%
defense or homeland security (n = 23)
Job candidates who will have security
52% 27% 12% 3% 3% 0% 3% 0%
responsibilities (e.g., security guards) (n = 33)
Job candidates who will work with vulnerable
populations (e.g., children, the elderly, the 48% 28% 12% 4% 0% 4% 4% 0%
disabled) (n = 25)
Note: n = 23-123. The data in this table represent organizations that conduct credit background checks on select or all job candidates. Data are sorted by
the “Accounts in debt collection” column. Caution should be used when generalizing results when the sample size is less than 30 for any category.
Percentages may not equal 100% due to rounding. The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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18. In general, after conducting credit background checks, if information
that presented the job candidate’s financial situation negatively were
discovered, what information is MOST likely to affect your decision to
NOT extend a job offer? (continued)
Accounts in Current
High debt-to- Medical- Education-
debt outstanding Bankruptcy Tax liens Foreclosures
income ratio related debt related debt
collection judgment(s)
Job candidates who will have access to
company or other people's property or
otherwise placed in a position of financial trust 42% 31% 15% 7% 4% 0% 1% 0%
(e.g., IT, administrative services, cleaning
crews) (n = 74)
Job candidates who will be employed in safety-
sensitive positions (including operating heavy 41% 30% 19% 7% 0% 4% 0% 0%
equipment, transportation, etc.) (n = 27)
Job candidates for senior executive positions
(e.g., CEO, CFO, CHRO) (n = 90) 38% 21% 17% 16% 7% 0% 2% 0%
Job candidates for positions with fiduciary and
financial responsibility (e.g., handling cash,
36% 22% 20% 16% 6% 0% 1% 0%
banking, accounting, compliance, technology)
(n = 123)
Job candidates who will have access to highly
confidential employee information (e.g., salary,
benefits, medical information or other 31% 40% 9% 12% 7% 0% 1% 0%
personal information about employees) (n =
75)
Note: n = 23-123. The data in this table represent organizations that conduct credit background checks on select or all job candidates. Data are sorted by
the “Accounts in debt collection” column. Caution should be used when generalizing results when the sample size is less than 30 for any category.
Percentages may not equal 100% due to rounding. The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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19. When conducting credit background checks on job candidates, in
general, how many years of credit history does your organization
check?
10 years
8-9 years 6-7 years 4-5 years 2-3 years 1 year
or more
Job candidates for positions involving national defense or homeland security 2012 14% 0% 71% 0% 14% 0%
(n = 7) 2010 27% 0% 64% 9% 0% 0%
Job candidates for positions for which applicable state law requires a 2012 8% 0% 69% 23% 0% 0%
background check (e.g., day care teachers, licensed medical practitioners) (n =
13) 2010 50% 0% 50% 0% 0% 0%
Job candidates for positions with fiduciary and financial responsibility (e.g., 2012 17% 4% 52% 17% 9% 0%
handling cash, banking, accounting, compliance, technology) (n = 122) 2010 16% 1% 61% 16% 6% 1%
Job candidates who will have access to company or other people's property or 2012 17% 3% 43% 26% 9% 3%
otherwise placed in a position of financial trust (e.g., information technology,
administrative services, cleaning crews) (n = 35) 2010 14% 0% 59% 14% 14% 0%
Job candidates who will have security responsibilities (e.g., security guards) 2012 29% 0% 43% 21% 7% 0%
(n = 14) 2010 7% 0% 79% 0% 7% 7%
2012 34% 3% 41% 15% 7% 0%
Job candidates for senior executive positions (e.g., CEO, CFO, CHRO,) (n = 59)
2010 26% 1% 61% 9% 3% 0%
Job candidates who will have access to highly confidential employee information 2012 20% 4% 39% 20% 14% 2%
(e.g., salary, benefits, medical information or other personal information about
employees) (n = 49) 2010 12% 2% 61% 12% 12% 2%
Job candidates who will be employed in safety-sensitive positions (including 2012 12% 0% 38% 38% 12% 0%
operating heavy equipment, transportation, etc.) (n = 8) 2010 38% 0% 50% 0% 13% 0%
Job candidates who will work with vulnerable populations (e.g., children, the 2012 0% 0% 33% 33% 33% 0%
elderly, the disabled) (n = 3) 2010 0% 0% 100% 0% 0% 0%
Job candidates who will work in health care or with access to drugs (e.g., 2012 100% 0% 0% 0% 0% 0%
hospitals, nursing homes, clinics, pharmacies, rehabilitation centers) (n = 2) 2010 25% 0% 50% 0% 25% 0%
Note: n = 2-122. The data in this table represent organizations that conduct credit background checks on select job candidates. Data sorted by 2012 data in the 6-7
years column. Respondents were asked to round up to the highest year. Caution should be used when generalizing results when the sample size is less than 30 for
any category. Percentages may not equal 100% due to rounding. The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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20. Background Information on Credit Background Checks
• Many employers conduct some kind of background check on job applicants and/or employees.
Background checks may include verification of educational or professional history, contacting
references, obtaining a report on an individual’s criminal history and/or obtaining a report on
an individual’s credit history.
• The Fair Credit Reporting Act (FCRA) authorizes employers to obtain a consumer report for
“employment purposes” from a consumer reporting agency (CRA) so long as certain disclosure
requirements are met. The term “employment purposes” means a report that is used for the
purpose of evaluating a consumer for employment, promotion, reassignment or retention as
an employee.
• For some employers, credit payment records serve as a factor in evaluating an individual’s
suitability for a job, while others seek information on driving records, criminal histories or
other background information. All of these types of reports are considered consumer reports if
they are obtained from a CRA.
• Before procuring a consumer report, FCRA requires employers to clearly disclose, in writing,
that a report may be obtained for employment purposes and get written authorization from
the individual. FCRA also requires that the employer provide the individual with a copy of the
report and a written description of the consumer’s rights before taking any adverse action
based in whole or in part on the report.
• The Federal Trade Commission web site has additional information on the rights and duties
imposed by the Fair Credit Reporting Act at (www.ftc.gov/os/statutes/fcradoc.pdf)
The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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21. Demographics: Organization Industry
Percentage
Manufacturing 19%
Health care and social assistance 17%
Professional, scientific and technical services 12%
Other services except public administration 10%
Educational services 9%
Finance and insurance 7%
Retail trade 5%
Public administration 4%
Transportation and warehousing 4%
Religious, grantmaking, civic, professional and similar organizations 4%
Accommodation and food services 3%
Note: n = 386. Percentages do not equal 100% due to multiple response options.
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22. Demographics: Organization Industry (Continued)
Percentage
Arts, entertainment and recreation 3%
Utilities 3%
Administrative and support and waste management and remediation services 2%
Construction 2%
Information 2%
Wholesale trade 2%
Agriculture, forestry, fishing and hunting 2%
Real estate and rental and leasing 2%
Repair and maintenance 2%
Mining 1%
Management of companies and enterprises 1%
Note: n = 386. Percentages do not equal 100% due to multiple response options.
The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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23. Demographics: Organization Sector
Privately owned for-profit organization 51%
Nonprofit organization 24%
Publicly owned for-profit organization 18%
Government sector 5%
Other 3%
Note: n = 386. Percentages do not equal 100% due to rounding.
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24. Demographics: Organization Staff Size
1 to 99 employees 24%
100 to 499 employees 40%
500 to 2,499 employees 14%
2,500 to 24,999 employees 17%
25000 or more employees 5%
n = 375
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25. Demographics: Other
Is your organization a single-unit organization or a
multi-unit organization?
Does your organization have U.S.-based
operations (business units) only or does Single-unit organization: An organization in
it operate multinationally? which the location and the organization are 36%
one and the same
U.S.-based operations only 76%
Multi-unit organization: An organization
Multinational operations 24% 64%
that has more than one location
n = 386
n = 387
For multi-unit organizations, are HR policies and
What is the HR department/function for practices determined by the multi-unit
which you responded throughout this headquarters, by each work location or both?
survey?
Multi-unit headquarters determines HR
56%
Corporate (companywide) 71% policies and practices
Business unit/division 15% Each work location determines HR
4%
policies and practices
Facility/location 15%
Note: n = 256. Percentages do not equal 100% due to A combination of both the work location
rounding. and the multi-unit headquarters 40%
determine HR policies and practices
n = 257
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26. Background Checking—The Use of Credit Background Checks in Hiring
Decisions
Methodology
 Response rate = 19%
 Sample composed of 544 randomly selected HR professionals from
SHRM’s membership
 Margin of error +/-4%
 Survey fielded December 28, 2011-February 7, 2012
For more poll findings, visit www.shrm.org/surveys
Follow us on Twitter: http://twitter.com/SHRM_Research
Project leader:
Justina Victor, survey research analyst, SHRM Research
Project contributors:
Evren Esen, manager, SHRM Research
Mark Schmit, Ph.D., SPHR, vice president, SHRM Research
Copy editor:
Katya Scanlan , SHRM Knowledge Center The Use of Credit Background Checks in Hiring Decisions ©SHRM 2012
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