So HN - Whom do you use for background checks?
EDIT: I have signed permission from the prospect to do the check.]
Call the last employer but one for an honest assessment of the reasons your prospective employee left and how easy they are to get one with - you already know they have the knowledge required for the job - you tested for that before and during the interviews - right?
If you still feel a little uneasy then it's a "No Hire" - end of story.
I think this is basic due diligence. I have also had confirming advice this is a good idea from previous company owners (and stories about times when they did not).
Its like checking if your accountant has money troubles.
There is also lots of research that shows people are really really poor at detecting lies (http://www.youtube.com/watch?v=EXm6YbXxSYk). We all have made mistakes in judging people, I am pretty trusting actually and have been burnt. There is too much on the line this time.
Most employers will not give detailed info to protect themselves from defamation lawsuits. Usually HR departments at big companies will just confirm the start date, end date, and position. Occasionally you can get more, if it is quantifiable (87% attendance, 2 promotions, 1 writeup).
I got a voicemail once that said something like this: "We're interviewing John Doe for the position of general manager at a widget factory. If you believe he is a trustworthy employee that you would hire again, call 213-555-1234. If you wound not hire him again, call 213-555-5678."
Pretty sneaky!
Even in India (where you can have checks of criminality and so on at the point of hiring, especially in large companies, thanks to the focus on Outsourcing) people don't disclose their financial information to employers. Banks and financial institutions will turn any inquiries down unless you are a law enforcement officer with the proper paperwork.
But I'll edit the question to make sure people know that the prospect has given signed permission for the inquiry.
Plus a potential employer could use the information from the credit report in salary negotiation. I don't really like this idea. Credit report are easy to obtain if you have consent, just check the major agencies, the ones I have dealt with in the past (not when hiring people) are TransUnion and Equifax.
You are putting a lot on the line when you hire a SysAdmin, Accountant, and certainly anyone with check-writing authority.
The employer that uses financial distress to bargain someone down is getting what they pay for. The employee will jump as soon as they can. I am not that kind of employer.
The point is not about the employer exploiting financial distress but that the employer can know what your current revenues are and therefore gain an edge.