Contributed by Credit Bureau Singapore
A bad credit reputation is usually due to consumers not repaying their debts on time, which will result in your credit score grade dropping significantly. Having a good credit reputation is telling of a person’s financial soundness, competence and capability. Therefore, a credit score may play a role in your approvals or rejections of not only credit applications with banks, but even when applying for jobs. Unfortunately, many consumers are unaware that an unsatisfactory score grade may affect their future job prospects. Companies may also want to prevent any potential cases of theft and embezzlement, and reduce legal liability for negligent hiring.
Companies are generally more inclined to hire those who come across as responsible, and a credit report does assist in that arena as it shows whether a person is a responsible payer or not. Being responsible tells a lot about a person’s way of working, and makes one seem more credible in the workplace. Henceforth, to a potential employer, a low credit score may pose as a red flag with regard to how responsible you are as a worker and the quality of work you execute. Therefore, consumers need to understand that having a good credit score may affect them in more ways than they think.
As mentioned, another reason why your job prospects may be affected due to bad credit is that employers want to ensure that when hiring, their potential new hires do not have the potential to misappropriate funds. Without a doubt, there have been many of such incidents being reported in recent years. The most recent example just took place in Singapore in July 2019 of an accountant embezzling a sum of approximately S$41 million due to his gambling habits. It affected 21 companies and S$24 million has yet to be recovered. The accountant was an employee who held considerable authority and held the company’s trust in him when handling their assets. Illegal activities can take place at any level, even for those who are of upper management levels, hence some companies will go through thorough credit checks for potential new hires in order to prevent these from happening.
Companies may also want to avoid legal liability for negligent hiring. This is especially true for banks and Financial Institutions as they are closely regulated by the Monetary Authority of Singapore (MAS). As part of the Fit-and-Proper guidelines by MAS, they are obligated to do employment checks which include credit checks on pre-hires. Under MAS’s Guidelines on Fit and Proper Criteria, it is stated that be it an institution, exempt financial institution, exempt entity or a fund management company, they must satisfy MAS that “it has in place appropriate recruitment policies, adequate internal control systems and procedures that would reasonably ensure that the persons it employs, authorises or appoints to act on its behalf, in relation to its conduct of the activity regulated under the relevant legislation, meet the relevant fit and proper criteria of these Guidelines”.
In a nutshell, to companies, a good credit reputation may be telling of one’s character and may be one of the factors when considering whether to hire a person or not. Always remember to only spend what you can afford, keep a constant lookout on what you’re spending on and take loans only if you are able to pay back in the future so that you are able to repay your debts on time and in full.
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