Aarohi Mehta was applying for a senior role at a finance company when the hiring process took an unexpected turn. In the second round, the human resources department asked for several details, including her credit rating and even older bank statements.
“While I was fine with sharing my credit rating, I believed bank statements are invasive. But they said that they were burned by candidates who gave fake salary slips. So I redacted everything other than salary credit and gave them my bank statements too,” she said.
Mehta said that in several countries such as the US and Australia, asking for previous salary slips is illegal. In India, however, there are few laws and enforcement remains limited.
The experience reflects a wider shift in hiring checks in some sectors, where credit ratings are beginning to feature alongside other background verification measures during recruitment.
A Harsh Reality
While asking for bank statements may go further than most companies are willing to go, many say credit ratings are increasingly becoming part of the interview process. Abhishek Kumar, founder of SahajMoney and a SEBI-registered investment adviser, recounted a similar case in which a candidate lost a job offer worth Rs 25 lakh a year because of a poor credit score.
“Most people think a CIBIL score is just a permission slip to get a home loan or a credit card. I am seeing a much harsher reality, it is becoming a character certificate,” Kumar said.
Credit scores were originally designed for institutions such as banks and non-bank finance companies to assess the risk of lending to individuals. They allow lenders and central agencies to take decisions on a person's creditworthiness.
However, their use has expanded beyond lending. In some cases, families of prospective brides seek a groom's credit rating. Some landlords who earlier asked for salary slips before renting out a house now also seek credit scores.
Popular With BFSI Companies
Dr Saundarya Rajesh, managing director of HR firm Avtar, said the practice has not become standard across industries but appears more often among banking and financial services companies.
Some companies believe that roles involving the handling of money require high levels of integrity. Candidates with lower credit ratings, which may reflect loan burdens, could be seen as posing a potential risk.
Rajesh said some charitable trusts may also seek credit ratings to reduce risk in roles that involve financial responsibility. “It can assure the donors that their institution has set many filters in addition to qualifications for roles that possess fiduciary responsibilities. A few senior job roles that include sensitive information handling, payment processing etc might also seek it,” she said.
The practice has not spread widely in technology hiring, according to Kamal Karanth, co-founder of staffing firm Xpheno Specialist Staffing, which focuses on technology recruitment.
“In BFSI, it's considered a normal practice. Most companies do not even ask for it; they check it themselves via a third party. If it turns out that a credit rating is not good, some of them, instead of rejecting, would hire the person on contract through a third party instead of a full-time employee,” he said.
ALSO READ: Your Credit Score Can Improve In Just A Few Months — Here's The Simple Plan
What Does Credit Rating Tell?
Kumar said some employers may see credit ratings as a quick way to assess candidates during hiring.
“It reduces the cost of searching for the right person. Most companies use background verification agencies to check their education qualifications etc, and it takes three to four months. Credit rating is an easy way out to evaluate a person by one one score,” he said.
Experts say credit ratings should only be considered alongside other checks such as references and background verification. On their own, credit scores may not reflect a candidate's suitability for a role.
“What does a credit rating say about a person's performance at a job? In reality, a person might have taken a burdensome loan to help the family or someone they know. How can that be a judge of character,” Rajesh said.
Experts also say that recruitment processes often rely on several filters that cannot guarantee job performance.
“That way, many filters of a selection process are not scientific in nature. They check qualifications, universities, make biases based on certain previous employers, and even Mother Tongue Influence, even if it's not necessary for the role, etc. Credit score is one such non-relevant addition to them,” Karanth said.
Is It Legal To Seek It?
India's Digital Personal Data Protection Act, 2023 states that seeking personal information such as a credit score requires explicit consent from the candidate and limits the purpose for which the data can be used.
Mehta said refusing to provide such information could mean losing a job opportunity. “I cannot choose losing a job offer over my data security,” she said.
She added that similar situations arise when renting a home or during marriage arrangements, where the party with greater leverage can ask for such details and the other side has little choice but to agree.
Experts say that until a specific law addresses the issue and enforcement becomes stricter, companies may continue to seek credit scores during hiring.
ALSO READ: Struggling To Get Loan Even With A Good Credit Score? Here's What's Happening
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.