Does bad credit make you a bad employee?

courtesy flickr user Andres Rueda

According to a 2010 poll by the Society for Human Resources Management, 60% of employers conduct credit checks as a routine part of the hiring process. I find this a little spooky. After all, what's more likely: That a new employee is going to totally make a hash of his or her boss's life, or that it'll work the other way around?

A group of researchers from Louisiana State University, Northern Illinois University and Texas Tech University took a more scientific view of the issue: They set out to see if credit scores really had anything to do with employee performance. At first glance, the answer appears to be no: The researchers had access to both credit scores and performance reviews of a group of employees, and found that credit scores didn't predict job performance.

Still, don't count on many employers giving up the practice of using credit as a tool to screen job applicants: The researchers also found that credit scores were correlated with certain personality traits--traits that employers care about.

The researchers looked at a number of factors that might affect employee performance. They administered personality tests, got credit scores from Fair Isaac Corp., and collected performance data from employers. The credit scores the researchers got from Fair Isaac were much more detailed than the more general credit reports most employers are able to grab.

Overall, the researchers found that workplace performance and credit scores did not appear to be linked. They also failed to find a link between so-called "workplace deviance" and poor credit. That's important, because employers often claim they check applicants' credit because they're worried about theft.

What your credit score says about you

Here are the traits that did seem to be linked to credit scores:

Conscientiousness: Employers care about this one. And employees with higher credit scores tended to also score higher on conscientiousness on the personality test.

Loyalty: Workers with higher credit scores scored higher on a scale of "organizational citizenship," and were more likely to show loyalty to their employers.

Agreeableness: Nope, people with higher credit scores are not nicer. It's the other way around. People with higher credit scores actually turned out to be less agreeable--again, as determined by personality tests they took--than people with lower credit scores. The researchers think this might be because 'nice' people are more likely to co-sign loans for their less credit-worthy friends or relations, and may even be more susceptible to sales clerks trying to get them to sign up for credit cards.

The study is slated to appear soon in the Journal of Applied Psychology.

Do you think it's fair for employers to check credit scores before making a job offer? What information would you like to have about a new workplace before coming on board?

More on CBS MoneyWatch

• Easiest way to get a raise and promotion
• Salary negotiations: Six steps to a better offer
• Why you didn't land the top job

[stephenbooth_uk]

It also ignores the fact that a common way of getting a bad credit score is to take on a reasonable amount of credit whilst working then suddenly find your self out of a job and that the payment protection insurance you took out won't pay. Next thing you know you're in arrears on your mortgage, your credit card, your college loans and your car loan, then your credit rating is down the pan.

[[e-mail]]

Even if you are working for a financial institution, I fail to see where a creidt score has any bearing on someones ability to do a job.

Credit reports are just that, a report. There are no details as to what the circumstances are surrounding it.

Any employer who would exclude a potential employee based on a credit score without talking to the candidate to get more information, is probably a company you don't want to work for anyway.

[eCredable_CEO]

None of the national credit reporting agencies would ever let an employer use Credit Scores. They open themselves up to unnecessary litigation if they do. You might find some less reputable credit reporting agencies trying to make money by selling credit scores, but it's a really bad idea.

[ladley100]

Typical pre-employment credit screens do not include scores; the report includes history. The employer must determine the acceptable/unacceptable criteria for the hiring decision.

[tsigili]

No.....but it can limit you to positions where you do not have control over cash or assets.

[jd2408]

I would think if your a financial adviser or work for a bank it would make a difference. At least a credit check would show how an employee takes their responsibilities.