What is a credit check?
A credit check is a summary of a person’s financial history and current financial situation. It provides an overall view of an individual’s creditworthiness, including their ability to meet financial obligations on time.
Credit information is commonly used by lenders, landlords and employers to assess risk before entering into financial agreements or employment.
In recruitment, credit checks are primarily used for roles with financial responsibility, where a thorough risk assessment is required.
Credit checks in the recruitment process – what should you consider?
Using credit checks in recruitment is not just about gathering information, but about making the right assessments at the right stage. In this section, we explain what to consider before, during and after carrying out a credit check.
Before carrying out a credit check in recruitment
Before conducting a credit check, you should have a clear screening policy in place. This helps define which roles justify a credit check, when it should be carried out and how the results should be handled within the recruitment process.
A structured approach also makes it easier to ensure that credit checks are only used when they are relevant and proportionate to the role. This is particularly important for senior positions where the candidate will have financial responsibility.
For roles involving responsibility for company or client finances, a credit check may be relevant. This includes positions such as finance managers, accountants, auditors, banking professionals and financial advisors.
Credit checks may be appropriate for senior roles with budget responsibility, decision-making authority or oversight of company assets. This can include roles such as CFOs, finance directors, procurement managers, operations managers or other senior positions with financial accountability.
Credit checks may also be relevant for roles where the individual is responsible for approving purchases, managing budgets or handling company assets. Examples include buyers, procurement specialists, site managers, store managers and similar roles involving financial decisions.
Credit checks may be relevant for roles involving access to sensitive information, secure environments or other critical assets. This can include positions such as security managers, IT managers, system administrators or other roles requiring a high level of trust and access.
Can employers carry out a credit check?
Yes, employers can carry out a credit check during recruitment – but only where there is a clear and legitimate need linked to the role.
What does the law say?
The use of credit checks in recruitment is governed by credit reporting regulations and GDPR. Employers must have a legitimate reason for carrying out a credit check, and the candidate must be informed in advance.
The information may only be used for its intended purpose and must be handled confidentially. The check must also be relevant and proportionate to the role and not more extensive than necessary.
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How do you carry out a credit check?
When conducting background checks with DISA, you can include a credit check as part of the process. You can tailor the check to your needs and decide which information to include, for example company affiliations or property ownership. Credit checks are typically carried out at a later stage of the recruitment process, when a candidate is being considered for employment.
The credit check is conducted via the data provider Creditsafe, which compiles information from public registers, the Swedish Enforcement Authority (Kronofogden) and other relevant sources. For international recruitment, equivalent information is obtained from local data sources in the respective country.
What information does a credit check show?
A credit check provides information about a candidate’s financial history and current financial situation. It typically includes details such as payment defaults, debts, income information and company affiliations.
This information gives an overall view of the candidate’s ability to meet financial obligations and their existing financial commitments. The specific data collected should always be based on the purpose of the check and the requirements of the role.
How to interpret the results
A credit check provides valuable information, but it should always be considered in context. A single data point rarely tells the full story, so the information should be assessed alongside other parts of the recruitment process.
If anything in the credit check raises questions, it is recommended to discuss this with the candidate. This gives them the opportunity to explain their situation and helps ensure the information is interpreted fairly.
Use the credit check as part of an overall assessment of the candidate, not as a standalone decision-making tool. A credit check reflects past financial history, but it does not provide a complete picture of a person’s current situation or future behaviour.
Getting started with background checks
A credit check is rarely used on its own, but is typically part of a broader background screening process in recruitment. By combining different types of checks, you gain a more complete view of the candidate and can make more informed decisions.
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