Can a Job Offer Be Rescinded After a Credit Check?

Companies often look at a candidate’s financial history to assess their reliability, trustworthiness, and overall suitability for roles where managing money or sensitive information is key. They’re not evaluating finances, per se, but they’re gauging whether someone can keep their own house in order before handing over the keys to theirs.

When to perform a credit check

Credit checks aren’t common practice. However, they’ve become integral to the hiring process for specific roles. Any roles relating to financial oversight, access to sensitive financial data, or upper management where financial decision-making is paramount will likely involve credit checks.

While it might sound like an outrageous breach of privacy to many, companies justify it by wishing to ensure that candidates are financially responsible. And it’s not just a simple credit score check. Employers may be looking for behavior behavior patterns, such as unpaid debts, bankruptcy, or a history of financial mismanagement.

Identity theft is a mounting issue, leading many to take steps to protect themselves. One of these is to freeze credit reports, making them inaccessible to all. This is great for security but raises a problem if applying for high-level positions. 

If this happens, a company typically allows the unfreezing of reports temporarily. But could a refusal lead to a rescinded job offer? Quite possibly. A company will likely see a frozen report as a red flag – something to hide. It could easily be seen as non-cooperation, leading to them withdrawing an offer.

Typically, companies only rescind offers if they have major reasons to. This decision is not taken lightly. Here are a couple of reasons why an employer might withdraw an offer after a credit check: 

• If the credit check reveals a history of significant financial irresponsibility. Unpaid bills, missed payments, and bankruptcy are all signs of potential problems that companies might consider.
• If the credit report shows discrepancies with the information the candidate provided during the application process. This usually happens when the information found on the check doesn’t tally with what’s been told to the employer. 

However, it’s important to stress that negative findings don’t always lead to a rescinded offer. An employer may allow a candidate to talk through the issues; if there are extenuating circumstances, they may be willing to move past the credit report. It’s not unheard of for companies to consider medical bills, divorce costs, tuition fees, etc., that we all face at some point in our lives. 

If a candidate believes they have issues that are likely to be raised by a credit check, it’s always best to disclose them beforehand; it’s better to get ahead of the bad news and be open and honest about it.

The Fair Credit Reporting Act (FCRA) was passed in 1968 and established certain rights regarding credit checks conducted by employers. Companies cannot perform a credit check without the candidate’s explicit written consent. If the check reveals information that adversely affects the candidate’s chances, the company must inform the candidate and provide them with a report. They must also be notified of their rights under the FCRA before any adverse action is taken.

It allows candidates to review the findings and dispute any inaccuracies. If the candidate doesn’t respond, the company is legally free to withdraw an offer after informing them with an adverse action notice. These steps must be taken carefully; failure to follow the law can be a legal minefield.

While credit reporting is generally accurate, mistakes can happen. Recently, Equifax faced a class-action lawsuit after providing inaccurate reports on as many as 300,000 people, leading to many facing higher mortgage repayments than they were expecting.