If you have an open position that involves managing money, you need to make sure you hire the right person for the job. If you do not hire the right person, the assets of the company could be placed in harm's way.
How will you be able to figure out if an applicant is going to do a good job managing the money of the company?
You may want to take a closer look at how the applicant manager has his or her own money. That is where an employee credit check can be important.
On the other hand, what factors make-up someone's credit score? How is a credit tally even calculated now?
Payment History Is the Largest Segment
Without a doubt, the most important factor in someone's credit score is their payment history. This involves whether the applicant could actually make his or her payments on time. For example, if the applicant is late paying his or her mortgage, this is going to hurt his or her credit tally.
On the other hand, if the applicant is able to pay his or her bills on time, this is going to increase his or her credit rank. In addition to mortgage payments, rent payments, credit card payments, utility payments, car payments, and even student loan payments all make up someone's payment history.
The longer someone's payment history is, the more accurate other reflection this credit tally is going to be. If someone's credit score is low, this could be a sign that the applicant is unable to pay his or her bills on time.
The longer someone's payment history is, the more accurate other reflection this credit tally is going to be. #creditscore Click To Tweet
The Amount of Debt Someone Has Is The Different in Someone's Final Credit Score
First, having debt is not necessarily a bad thing. Unless someone has that, he or she is going to have a hard time demonstrating that he or she can pay his or her bills on time because there simply won't be any debt to pay.
On the other hand, you also don't want to hire someone who has too much debt. The level of debt someone has does play a role when calculating a credit score. For example, it is not unusual to see someone with a mortgage. Mortgages can take decades to pay back.
On the other hand, if someone has a particularly large mortgage, a lot of student loan debt, and carries a balance on multiple credit cards, you may want to ask a few questions before you decide to hire that person.
You want to make sure that you hire someone who is capable of managing his or her debt. If so, then that person may do a good job managing the debt of the company as well.
There Are Other Factors as Well in Determining Someone's Final Credit Tally
The payment history and the level of debt are the two biggest factors involved in calculating someone's credit score. On the other hand, there are other factors that will play a smaller role.
For example, the age of someone's credit history is going to play a role. The longer someone's positive credit history is, the higher someone's score will be. You want to hire someone that has a relatively long track record of success. Credit inquiries will also play a role in someone's credit score.
On the other hand, credit inquiries are not necessarily a bad thing. For example, if someone wants to open a new credit card, a credit check is going to be conducted.
If you ask for a credit check on an applicant, this is also going to hurt their credit score. Fortunately, this is not a large factor when calculating someone's credit score.
The payment history and the level of debt are the two biggest factors involved in calculating someone's credit score. Click To Tweet
Consider Running a Credit Check on an Applicant for Their Tally
You may not feel like you need to conduct a credit check on every applicant. On the other hand, if you are seriously considering someone for an open position, you should probably conduct a credit check.
Particularly if the open position involves money management, you want to make sure the applicant is going to do a good job managing the company's money.
You also want to make sure the applicant will do a good job managing the money of any clients who may be working with the company.
That is where a credit check is helpful to determine someone's final credit tally.
Your Turn
Do you check on someone's final credit tally before you hire them? Do you know what your final credit score is?
In the least, this is important because if you need to borrow money for your business you will need a decent credit score. The better the score the lower the interest rate for your business loan.
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