Late Payments and Leery Applicants: Credit Checks as a Selection Test |
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Authors: | Marsha L Nielsen Kristine M Kuhn |
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Institution: | (1) Department of Management, Washington State University, Pullman, WA 99164-4736, USA |
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Abstract: | The use of pre-employment credit checks has grown dramatically in the U.S. in recent years, but there has been almost no research
on their validity from a selection standpoint and none on how applicants respond to them. We examine the use of credit checks
as a selection test, reviewing evidence for their validity and legal considerations. The theoretical part of the article highlights
how credit checks are distinct in key respects from more commonly studied selection tests and how they are likely to violate
many applicants’ expectations of privacy and procedural justice. The empirical section presents the results of a study of
business undergraduates. Consistent with hypotheses, results indicate negative reactions to the use of credit reports in hiring,
moderated by job and individual characteristics, and substantial misunderstanding of what credit reports contain. Implications
for practice are discussed. |
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Keywords: | selection privacy attitudes organizational justice credit history |
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