Credit check is an objective and thorough examination of the historical credit report of the candidate/employee as part of the screening process. In Indonesia, credit history is only and legally issued by the Financial Services Authority of Republic Indonesia (OJK).

In addition to criminal checks, drug tests, and background checks, companies also need to run a credit check. The more a company knows about the candidates’ background, the less risk of bad hires.

Candidates’ credit history can be a sign of potential problems, including:

1. Many late payments indicate that the candidates are lacking responsibility, disorganized, and do not live up to agreement.
2. Having excessive debt indicates that there is a financial pressure that might increase the tendency of doing fraudulent acts.

Although the tendencies do not always occur, companies naturally prefer not to take risks. Moreover, if the offered position is closely related to access to sensitive information, assets or company finances, the companies urgently need to have credit check on them.

Human Resource Society survey revealed that companies generally conduct credit checks for certain positions that are related to finance or fiduciary responsibility (91%), senior executives (46%) and positions that have access to employment information very secret (34%).

Some companies even evaluate the credit history of their employees on a regular basis, especially in the framework of evaluating promotions. Higher position means greater risk. Ensuring the employee has a healthy credit record means minimizing the risk.

For further information about credit check as well as other kinds of checks related to pre-employment screening, you can contact us contact@integrity-indonesia.com or visit our booth at HR Expo on December 12-13 2018 in JCC, Jakarta.

Sources:

https://www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/pages/creditbackgroundchecks.aspx