Credit Checks in Employee Selection (Part 2 of 2): Applicant Reactions

Summary by: Ian B. Mondrow, M.A.

Selection tests that have little face validity can kill an applicant's attraction to a job opening or organization. Using a sample of 126 students. Nielsen and Kuhn decide to evaluate the perception of credit reports as a selection tool.

Participants were give one of two job descriptions. Both of the descriptions provided a summary of the job and the organization's history. The only difference between the two documents was that one of them mentioned handling money as one of the job's responsibilities. Participants were randomly assigned to each group and informed that they were invited to an interview where the hiring manager asked him/her to sign a waiver permitting a credit check. They were asked a series of questions of a 7-point scale.

In general, it was found that participants had negative reactions to the credit check as they felt it was unfair, did not predict performance, was not related to the job and was an invasion of privacy. They did believe that employers use credit checks as a way to verify responsibility and reliability in job candidates Including budgeting in the job description did not increase the credibility of the credit report.

 However, 51% of the participants were confident that their credit history would appeal to the hiring organization. Unfortunately, individuals did not feel they knew what a credit report would cover (M = 2.12,  SD = .78). Those who emphasized an understanding of credit checks were more likely to perceive them as a fair selection tool, F = 10.22, p <.01, and had a significant level of face validity, F = 7.11, p < .01. There was no relationship between credit history knowledge and perceived accuracy, invasiveness or predictive validity.

IMPLICATIONS FOR HUMAN RESOURCE (HR) PROFESSIONALS

Based on this study's findings, HR professionals should be cautious in utilizing credit checks. Appliants appear questionable in the use of credit checks and feel that it is intrusive. Content in job descriptions provides no variation on this outlook. Therefore, it may be beneficial for hiring managers to explain the usage of credit checks and how the information will be utilized in the hiring process. Managers should also encourage job applicants to ask for a copy of the report to make them feel more at ease.  Many times, applicants are handed the consent form but have no real conversation of the credit checks. It appears that elaborating on its use and how it will benefit the position can overcome any fears shared by applicants. 






Source: Nielsen, M.L., and Kuhn, K.M. (2009). Late payments and leery applicants: credit checks as a selection test.  Employ Respons Rights J, 21, 115-130.