Someone told me credit score like CIBIL are being checked for job applications. Is this true?
Yes you heard it right as many companies especially multinational companies are increasingly using credit reports to check the credit worthiness of an individual. Anyone with decent credit score is considered to be a better manager compared to someone with a poor credit score. The rationale behind the move is the thought process that if you cannot manage your own finances well, what are the chances you may manage the company affairs?
Here are reasons why an organisation might need your Credit Score.
Gaining Trust: If an organisation asks for your credit report and finds that you have a good Credit Score, they may consider you trustworthy. It indicates integrity and shows that you’re willing to pay your dues and that you are building a good relationship with your bank. Banks and financial institutions require their employees to have honesty and integrity, when it comes to handling sensitive data like financial information of their clients.
Bad Performance and Reckless Nature: If an employee has financial issues and is unable to make repayments towards their loans or Credit Cards, it may have an adverse effect on their performance. While this may not be the sole cause of poor performance, this can be a contributing factor. The bad score may also indicate that an employee is quite reckless, when it comes to repayments towards his or her loans or Credit Cards, and may give employers a sense that the person may struggle to take responsibility or maintain their performance at optimum levels.
How can this situation be handled?
As per guidelines issued by the RBI, only banks and other financial institutions can have access to credit reports maintained by companies like CIBIL and if any requests for the same are made by other companies/organisations, they are not to be entertained. The requirement for you to produce CIBIL report in order to secure employment is purely at the discretion of the company offering the job. Should you apply for a job and be asked to provide a credit report, you should comply with them.
If you are about to apply for a job, or are planning to do so in the near future, the best thing to do is to ensure that credit history is decent enough.
Want to check your Credit Score for free? Click here.