Any organization in the financial services industry will likely have access to sensitive financial information and potentially direct access to customers’ funds. As a result, it’s become standard practice for financial institutions to run credit checks on potential new hires to evaluate their financial responsibility and trustworthiness.

Financial analysts will typically have access to confidential information and customer accounts. Therefore, it’s vital for financial organizations to properly vet new hires to guarantee they will not misuse information or funds to protect the company and its customers.

Why are these checks essential, and do you need to run one? Keep reading to learn more about why credit checks have become standard for financial analyst roles and most other roles at a financial institution. 

Why Are Credit Checks Important for Financial Roles?

Financial analysts and related roles require high trust in the employee. Unfortunately, job listings for these roles often attract bad actors or unqualified candidates. 

A prevalent sentiment throughout the financial industry is that an applicant with a recent bankruptcy, several accounts in collections, or multiple missed payments are more likely to participate in fraudulent activities.

Additionally, it's commonly believed that if someone has trouble managing their own money, they may not be the best choice to manage customer accounts.

These beliefs are not necessarily hard rules, as someone with a poor credit rating isn’t necessarily bad with money or willing to commit fraud. Yet, credit checks are an additional data point for evaluating candidates. 

What Will You Learn From a Credit Check?

Employment credit checks typically involve obtaining a comprehensive credit report. However, it’s worth noting that some credit checks will simply return a credit score. While helpful, you’ll need a full credit report to evaluate a candidate’s financial history thoroughly.

What to Look for On a Credit Report

A credit report will give you details about current and past accounts, but what exactly are you looking for? Let’s explore exactly what you should pay attention to once you receive the report.

• Trustworthiness: A high credit score and a variety of accounts in good standing indicate an individual's trustworthiness regarding handling customers’ financial information and accounts. An applicant struggling with collections or bankruptcy is often believed to be more likely to commit fraud. Likewise, a candidate with a strong credit history doesn't mean they'll be good at managing someone else's money, which is why we also recommend a Credential Verification in addition to the Credit Check to assess their true qualifications.
• Financially Responsible: An applicant responsible for their funds is more likely to have a baseline understanding of handling customer accounts. Ideally, a financial analyst will have additional training or experience, but if they aren’t applying their knowledge to themselves, it’s not a strong sign of financial responsibility.
• Organizational Capabilities: Has the applicant missed multiple payments in recent years? Missed or late payments are often indicators of poor organizational skills, which may reflect back on your company if the candidate is hired.

It’s essential to evaluate each credit report on a case-by-case basis and consider the overall candidate’s qualifications and experience. Without significant red flags, a credit report should be an additional data point to consider rather than the ultimate deciding factor. 

Give candidates a chance to explain any areas of concern in their report. For example, perhaps a family emergency resulted in missed payments, or a credit card went into collections between jobs. Consistent patterns over seven years are concerning, but single incidents may be explainable. 

Do You Need to Run a Credit Check?

Employers in non-financial industries won’t likely need to run a credit check on new hires. However, financial analysts and other roles throughout the financial industry will likely benefit from the additional insight into an applicant's personal financial history. 

You may also have specific regulations or client agreements requiring a credit check before hiring a candidate.

It’s also worth noting that credit checks are mandatory for federal employees in Canada, which lends credibility to the value of these reports. 

Put eScreener to Work for Rapid and On-Demand Credit Reports

Financial analysts need to demonstrate a strong understanding of managing personal finances and evaluate if they may participate in fraudulent activities. Hiring a single bad actor can have significant consequences for your organization. That’s why credit checks have become standard practice for many roles throughout financial institutions.

Are you ready to streamline your credit report process? Our cloud-based eScreener platform lets you run credit checks on-demand with rapid results. Check out eScreener today to discover how our platform can help you hire only the best candidates.