Credit Checks

Credit Checks

Credit and background checks are important risk management tools for money services businesses and can protect an MSB from losses.
There are at least several reasons to perform a pre-employment credit history check through a credit reporting bureau on all applicants for full and part-time jobs… prior to the hiring decision.

  • Knowledge: A person who has managed his or her own finances poorly may not know how to maintain finances, accurately keep up with transactions, and balance a cash drawer. If so, are you prepared to train the person? Or would another candidate be a better choice?
  • Skill: A person with a record indicating poor management of his/her own finances may know what to do but not have the skills necessary to capably manage a cash drawer and perform financial transactions accurately for your business and its customers.
  • Motivation: An otherwise good, wonderful person fallen on hard times, in desperation and burdened under the stress of poor finances may seek a quick and easy solution to their problem. Someone with a credit report showing numerous liens or judgments against them, multiple credit accounts at maximum levels, or payments at, or exceeding income levels, may not be a good employment risk. Is the person likely to under more or less financial stress down the road. Do you want to chance it? Can you afford too? Or would it be better to continue searching for a better qualified candidate with better credit?

Consistent policies should be developed so that all applicants are treated fairly without discrimination while providing for reasonable protection of the business from employment risks.

Note too that many states require pre-employment as well as periodic post-employment credit and background checks on the employees of MSBs. Be sure to learn and follow the specific of state laws applicable to your business’ activities.