Credit Scores
- Employers want to hire, retain, and promote responsible employees. Encouraging employees to get and improve their credit scores will encourage employee responsibility. It is important to let employees know if background checks include some form of employee credit scores.
- Encouraging employees to get and improve their credit score has many direct and indirect benefits. Direct benefits to employers include reduced human resource administrative costs because employees are more likely to take care of their own financial issues. Indirect benefits include reduced employee absenteeism related to financial problems.
- Higher employee credit scores will likely result in fewer requests for company loans because a higher credit score will enable employees to get loans at lower interest rates. In addition employees will have less trouble getting approved for new credit, such as a car loan.
- A low credit score signals debt management issues which may increase employee dependence on their employee compensation which in turn puts more pressure on employers for higher wages and salary.
- Human Resources administrative costs may be lowered by reduced need to provide assurance for employee loans, rent, and utilities. Low credit scores will require employer back-up for employees seeking car, home, and college loans.
Click here to go to our companion page on Credit Scores for your employees.
Click here to go to the next topic, Debt Management, to learn about ways to help employees seek guidance on financial problems.
About the Financial Literacy Center
The FLC's mission is to develop and test innovative programs to improve financial literacy and promote informed financial decisionmaking.
With support from the Social Security Administration, the Center was established in October 2009 by the RAND Corporation, Dartmouth College, and the Wharton School of the University of Pennsylvania in order to develop educational tools and programs that help individuals prepare for their long term financial stability.
About the Program
Presented by the Financial Literacy Center, a joint center established by the RAND Corporation, Dartmouth College, and the Wharton School of the University of Pennsylvania in order to develop educational tools and programs that help individuals prepare for their long-term financial stability.
Success Stories
Take a look at how companies like Mandarin Oriental Hotel Group and Nationwide have had success with automatic enrollment and automatic escalation.
The Dartmouth Project
Increasing employee participation in retirement plans has always been a challenge.
However, researchers at Dartmouth College, through a grant provided by the National Endowment for Financial Education, show that specific low-cost strategies succeed in boosting employee participation rates.
