Credit Reports In Employment Screening

Adv Kate Thambiran @ Lucid Living

According to South African law, it is illegal for any employer to discriminate against present or potential employees on grounds such as race, gender or sexual orientation.

But in terms of the Employment Equity Act, preferring one candidate over another on grounds that are strictly related to job requirements is not unfair.

So if you go for a job interview, is the company allowed to access your credit report? And when is the credit bureau allowed to show your credit report to a potential employer?

The company is entitled to consider your creditworthiness only if having a good financial record is a requirement of the job you’re applying for.

So a potential employer is not being discriminatory if it uses a credit report to assess your honesty and reliability.

However, this should only happen when the job involves some measure of responsibility for the control of finances.

But first, prospective employees have to give their consent for the release of the credit report.

You must be fully aware of what information the company will have access to, and you should be under no pressure to make your credit report available.

There may be instances when a prospective employee could give permission even if the position is not directly related to the handling of finances, but consent still needs to be given freely.

Sometimes job seekers might feel obliged to accede to a request because they don’t want to appear ” difficult”.

If you believe a potential employer has unfairly discriminated against you on the grounds of your credit report – for example, where it is not directly relevant to the job and you declined to give consent, or if it is not relevant to the job but has been used as the main reason not to hire you – you do have recourse.

You can approach the Commission for Conciliation, Mediation and Arbitration (CCMA). If that process fails, the issue could go to arbitration, and to the labour court.

The onus is on the potential employer to ensure that the requirements of the job are relevant to the request for the credit report. The employer would need to show that the interviewee’s creditworthiness is relevant, if the employer wishes to use the information.

Unfortunately, it is difficult for prospective employees to prove they have been discriminated against – because the “real” reason for declining an applicant, is not always disclosed.

The use of credit reports in employment screening has increased dramatically, in recent years. Employers view a poor credit report as a predictor of potential financial mismanagement and fraud, in the company.

Before applying for a job, check your credit report. Ensure that the information is accurate and up to date. If your creditworthiness is negative, attempt to rehabilitate it, before applying.