Published April 23, 2012
Oh, the dreaded credit score.
These three numbers play an integral role in our personal and financial lives. It’s not enough that we have to keep up with three different versions that never seem to quite agree, but nowadays we must also be ready to defend our scores during a job interview.
The use of credit background checks in applicant screening is fairly common practice in this country. According to the Society for Human Resource Management, 60% of employers check applicants’ credit reports for at least some of their job candidates as part of their hiring process. Naturally, this begs the question, what do credit checks, and credit scores, for that matter, really tell us?
Not what we may think, according Daniel Whitman, assistant professor at the Rucks Department of Management, Louisiana State University. In a recent study published in the Journal of Applied Psychology, Whitman and his coauthors uncovered some interesting relationships between credit score, personality and performance.
Being too agreeable will get you in trouble. One of the most interesting findings of the study is that an individual’s level of agreeableness correlates with their credit score. The study finds that the more disagreeable a person is, the higher the credit score. That’s right, those unpleasant contrarians among us have an edge when it comes to securing high credit scores.
What’s likely happening is that those who are conflict avoidant are prone to being taken advantage of, particularly when it comes to saying no to store credit card offers or family members looking for a cosigner on loan. “It’s not always selfish to say no,” says Whitman. Knowing when and how to say no can keep you out of trouble. However, you can’t just go around saying no to everything, you have to maintain some sense of balance. “Disagreeableness is like hot sauce, too much can be a bad thing, but just the right amount will give you that perfect flavor,” he says.
Credit scores predict performance. Whitman and his team found a positive relationship between credit score and what they termed as “task performance” and “citizenship behavior.” In other words, higher credit scores correlated to good performance and positive workplace behavior.
However, this doesn’t mean that credit score should necessarily be used by employers when making hiring decisions--there are numerous other tools and techniques available for predicting performance that are far more job relevant and less invasive, including structured interviews, personality assessments, and skills tests.
Credit scores don’t predict theft. Although the study did find credit scores to be predictive of individual task performance, the researchers did not find a significant relationship between credit score and theft or counterproductive workplace behavior--the rationale frequently used by companies to require credit checks for candidates.
Whitman warns that this surprising finding should be a cautionary tale for employers. Credit scores can be adversely affected by factors outside of one’s control, which means the most honest and law abiding citizens can have a bad score.
Michael “Dr. Woody” Woodward, PhD is a CEC certified executive coach trained in organizational psychology. Dr. Woody is author of The YOU Plan: A 5-step Guide to Taking Charge of Your Career in the New Economy and is the founder of Human Capital Integrated (HCI), a firm focused on management and leadership development. Dr. Woody also sits on the advisory board of the Florida International University Center for Leadership.Follow Dr. Woody on Twitter and Facebook