Understanding The Role of Credit Report in Professional Landscape

Organizations often utilize credit reports in job recruitment, particularly for positions with access to company finances directly. This aims to provide employers with a clear guide for decision-making, ensuring they are well-informed and can make the best hiring choices.

A credit report serves as a potential indicator of an individual’s financial responsibility and trustworthiness, aiming to mitigate risks associated with financial misconduct. A report from HR.com and the National Association of Background Screeners (NABS) in 2018 in the United States showed that 95% of companies run several background checks on candidates, and almost one-third of companies check on some candidates’ credit scores. This is done to understand candidates’ backgrounds before hiring, ensuring they will work responsibly and not burden the company with ongoing heavy debt matters.

Debt may affect one’s performance in personal and professional areas. Candidates with heavy debt burdens may exhibit unprofessional conduct, such as decreased focus and lack of productivity. Even worse, if the candidate has multiple outstanding debts, it may lead to unethical behavior like fraud due to pressure in repayment debt or when dealing with debt collection practices.

In Indonesia, such practice in the professional setup has sparked an interesting conversation in social media. In 2023, five fresh graduates were rejected at the end of the recruitment process due to their low credit scores. The company based its decision to disqualify these fresh graduate applicants because of their Collectibility Score (KOL) of 5, as indicated by the OJK SLIK system, which signifies a history of poor credit.

Read also: Unveiling The Benefits of Credit Report and Scores

President Director PT CRIF Lembaga Informasi Keuangan (CLIK) Leonardo Lapalorcia emphasized the need for reliable sources of credit scores. He pointed out that low awareness of credit scores is due to the infrequency of their use. However, when the need arises, and an individual’s credit score is unfavorable, it can lead to significant difficulties, such as job rejections.

“We applaud the efforts of professional workplaces to consider checking the credit report for their prospective employees, but it is also important to embrace reports from other comprehensive and trusted providers like credit bureaus,” he said.

In the financial landscape, a credit score shows someone’s risk profile based on their transaction history. “Usually, it gives Banks or other Financial Institutions insight before proceeding with loan approvals. But in broader circumstances, a credit score can also analyze potential debtor behavior, such as their repayment ability. The more consistent someone is in paying their debt, the healthier their credit score becomes,” add Leonardo.

As one of Indonesia’s reputable private credit bureaus, CLIK provides a credit score generated from a combination of conventional and alternative data. “Credit scores from PCBs are reliable because our reports capture an individual’s more comprehensive risk profile. Financial Institutions can directly obtain their reports from CLIK or our partners, such as Amalan or Skorlife. For the public, it is very important for you to practice wise shopping behavior and maintain credit health. Then, you can show the employer you are a trusted candidate,” he concluded.