24-Dec-2015 written by : FSI-Team
Till almost a decade back you could get a loan based on your contacts, how big your relationship with the bank was or how well you knew the manager. Then came in CIBIL and rest as they say is history; the world of lending changed forever for the borrower and the lender. The borrower now had something that he could work upon to improve his chances of getting a loan and the lenders found an objective and statistical too to assess applicants. Well who ever could have though the utility of the CIBIL score could move beyond loan and impact a person’s employability too!
Though it may seem a little improbable but CIBIL score can affect your chances of landing a job. In India this trend is still limited to a few sectors and for top management jobs but in a lot of other highly credit driven economies it is the norm.
A CIBIL score reflects the financial health of a person but apart from that it also reflects whether a person is organized, honest and dependable or not. There are some direct effects of hiring someone with a bad credit score while there may be some not so direct outcomes too.
Establish Trustworthiness: A credit report could be a good way to figure out if the candidate can be trusted or not. If the credit report reflects that the person does not have integrity or the required will to pay his dues then it will be difficult to trust such a person especially if it is the finance function or a top management position which requires impeccable honesty. In banking and finance sectors a lot of financial information of clients may be accessible to employees; the company would need to be very careful who they can trust with such sensitive information.
Possibility of Litigation: When some with a bad credit score is employed and that person has defaulted on a loan then there is strong possibility of a litigation taking place. The company could lose out not only in terms of lost man hours but if it is a highly placed official then it may not augur well for the image of the company. If somebody has a lot of pending dues then he or she could prove to be a liability of the company.
Reflects Sloppiness and Lack of Planning: There are various reasons for a poor CIBIL score. Underlying reasons could be lack of planning or just not being smart enough and careful enough to manage your money matters. If one continues to forget paying on time then it is a sure sign of sloppiness, a high credit ratio could reflect poor planning. The employer may wonder if a person cannot be responsible about his finances then can be considered fit to manage the company’s issues.
Could Act as a Tie Breaker: If there are two prospective employees who are equally good on all parameters (hypothetically) then it would easier to favor the person with a better credit score. As talked about earlier a better credit score reveals better management and financial skill along with integrity.
The importance of a good CIBIL score goes beyond just the prospect of getting a job. A good credit rating reflects overall sound financial health; a low credit score should raise a red flag and requires course correction. It is important that one checks their CIBIL report once a year so that they can sort out any issues that may be reflected in the credit report, timely. An employer cannot ask for the interviewee’s credit report directly and the interviewee will be asked to get it. Sometimes there may be time to sort out any issues and sometimes there may be no time to make any improvements so it is better to be prepared at all times.
However if the CIBIL score is low due to some genuine reason or an error the interviewee can explain this during the course of interview and most likely it would be accepted. Staying credit healthy should be a part of your normal financial planning and one should follow the simple rules and tips that help one in remaining credit healthy.