NDLI: Exploring the Use of Credit Scores in Selection Processes: Beware of Adverse Impact

Content Provider	Springer Nature Link
Author	Volpone, Sabrina D. Tonidandel, Scott Avery, Derek R. Castel, Safiya
Copyright Year	2014
Abstract	The use of credit checks or credit scores in personnel selection has received widespread media attention of late. Though there is speculation that basing hiring decisions (even partially) on credit-related variables may produce or increase adverse impact, virtually no empirical literature exists to support or refute this claim. The present study explores the impact of using credit scores, in the context of a larger selection system, on adverse impact.We conducted Monte Carlo simulations representing various real-world selection systems (i.e., multiple hurdle, multiple hurdle with cut-off score, single hurdle). In addition to applicant credit scores, each simulation included variables that organizations commonly use during selection (i.e., educational background, personality).Results showed that in a majority of simulated hiring scenarios, using credit scores (as opposed to a random, race-neutral variable) widened the Black-White gap in hiring, producing more violations of the 4/5ths rule and statistically significant adverse impact.These results imply that organizations should be cautious when using credit scores to evaluate potential or current employees for jobs.This is one of the first studies to provide empirical evidence of a relationship between credit scores in selection and adverse impact. The use of simulations helps organizations be proactive in regards to choosing selection practices. Our results in particular pinpoint the situations where implementing credit scores as part of a larger selection process might be most problematic in terms of adverse impact, thereby providing much needed guidance to those considering credit scores for their selection processes.
Starting Page	357
Ending Page	372
Page Count	16
File Format	PDF
ISSN	08893268
Journal	Journal of Business and Psychology
Volume Number	30
Issue Number	2
e-ISSN	1573353X
Language	English
Publisher	Springer US
Publisher Date	2014-06-14
Publisher Place	New York
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Credit score Monte Carlo simulation Selection systems Adverse impact 4/5ths rule Employment discrimination Disparate impact Industrial, Organisational and Economic Psychology Community and Environmental Psychology Personality and Social Psychology Business/Management Science Social Sciences
Content Type	Text
Resource Type	Article
Subject	Business and International Management Applied Psychology

Sl.	Authority	Responsibilities	Communication Details
1	Ministry of Education (GoI), Department of Higher Education	Sanctioning Authority	https://www.education.gov.in/ict-initiatives
2	Indian Institute of Technology Kharagpur	Host Institute of the Project: The host institute of the project is responsible for providing infrastructure support and hosting the project	https://www.iitkgp.ac.in
3	National Digital Library of India Office, Indian Institute of Technology Kharagpur	The administrative and infrastructural headquarters of the project	Dr. B. Sutradhar bsutra@ndl.gov.in
4	Project PI / Joint PI	Principal Investigator and Joint Principal Investigators of the project	Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon
5	Website/Portal (Helpdesk)	Queries regarding NDLI and its services	support@ndl.gov.in
6	Contents and Copyright Issues	Queries related to content curation and copyright issues	content@ndl.gov.in
7	National Digital Library of India Club (NDLI Club)	Queries related to NDLI Club formation, support, user awareness program, seminar/symposium, collaboration, social media, promotion, and outreach	clubsupport@ndl.gov.in
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9	IDR Setup or Support	Queries related to establishment and support of Institutional Digital Repository (IDR) and IDR workshops	idr@ndl.gov.in

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