Background Check 101: Be Honest, Since They're Going to Find Out Anyway

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The prerequisite background check for senior Wall Street professionals almost always includes a review of any criminal record, litigation, liens against them, bankruptcy proceedings, regulatory actions by the likes of the SEC, NFA and FINRA, and - you give consent - driving and credit histories.

Employers will often request confirmation of the information listed on your resume, adds Joe O'Donnell, vice president at Investigative Management Group, a New York company that handles background checks for banks and other employers.

These checks don't come cheap. Clients pay IMG a hefty $2,500 per candidate for undertaking due diligence on management-level candidates. O'Donnell emphasizes that his firm will often investigate whether a candidate cited for fraud, for instance, has put private assets in a spouse's name, or whether a candidate has fudged something on their resume, like suggesting they graduated from a particular school when in fact they attended only briefly.

When C-suite executives are involved, IMG will go still further, sometimes taking the results of online searches and traveling to states where the candidate previously resided, to search on-site court records there.

Be Forthcoming - Beforehand

Advice from experts and Wall Streeters themselves goes like this: Be straight with your interviewer. Assume potential employers will uncover all your foibles, and do as much damage control as you can before your formal credit checks have begun.

For example, O'Donnell believes some of his clients in private equity might be willing to overlook an arrest for a DUI right out of college, some 10 or 15 years ago. In this instance, you'd be smart to bring up the indiscretion as something the employer is likely to learn about.

The same thing goes for credit checks that are likely to unearth poor scores, especially if you've got a reasonable explanation. "If you're a decent person applying for a job and have some credit issues because you've been out of work for a while, it's really best to be upfront about it," says Ann Hayes, president of IMG. Clearly, too, anyone applying for a job who's faced bankruptcy will want to put the best possible face on things by being honest and explaining clearly and concisely what happened and why.

Even in criminal matters, it's best to be forthcoming early on, say Hays and O'Donnell. That way you present your side of the story before a third party can drop the information on your employer, without your knowledge or input.

The last thing you want to do is come across as dishonest, says Hayes, who notes that recently there's been a rash of people "enhancing" their resume with inaccurate information.

O'Donnell's advice: "Don't embellish."

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