Businesses are rejecting candidates over bad debt. Would you?

16/11/2017

No business wants a late paying customer. But what if it’s a potential employee who has a history of bad debt?

Would you turn a candidate down for the job based on their adverse finances? According to a leading recruiter, many businesses do.

In the year to July 2017, almost 2,000 applicants were turned down for work due to bad debt, analysis of the Reed Screening database has revealed.

This is a 7% increase on the previous year. Whilst this could signal a growing trend for businesses using this information, it could also reflect the 10% rise in UK household debt over the past year.

Many employers carry out background checks as a standard part of their recruitment processes.

The recruitment company claims bad debt is responsible for people failing a vetting test 80% of the time, making it the most common reason for failure.

Whilst the majority of candidates vetted for adverse credit or bad debt are applying for jobs in the financial sector, lots of other professionals can also be subject to the same financial scrutiny – which usually involves at least a credit check.

These include doctors, nurses, midwives, occupational therapists, care support workers, teachers, teaching assistants, youth staff, security officers, complaints handlers, HR specialists, engineers and recruitment consultants, according to Reed.

Performing an Adverse Financial Check reveals if a person has information on their credit history such as a county court judgment, bankruptcy or insolvency voluntary agreement.

There is no clear classification of what makes a ‘bad debtor’. Screening parameters are currently set by individual companies.

According to Reed, as a general rule, those with four or more defaults over the last six years will result in a candidate being rejected for a position.

When asked why financial scrutiny is important some businesses would argue that ‘bad debtor’ status is perhaps an indicator that the person may commit fraud in the future.

Therefore, ensuring a candidate’s personal financial situation is disclosed reduces the risk of fraud being committed.

But there are many cases where people with no debt go on to commit fraud.

So, filtering out candidates in this way could be causing businesses to miss out on a great deal of talent within the market without any concrete evidence that it’s benefiting the business.

It also creates a catch 22 situation for the candidate. If missed payments result in difficulty getting a job the debt will only increase as more payments are needed to be skipped – creating an even higher chance of failing a job screening.

What do you think? Would you consider a potential candidate’s credit history as part of your recruitment process? Let us know in the comments below.