You’ve done it, right?
You’ve googled the person you found on Match.com.
You’ve called references with new hires.
You’ve had your credit checked when renting an apartment or applying for a mortgage.
We don’t like surprises. We do our due diligence, right?
Want the inside scoop on how to do it better? Much better.
We generally suck at evaluating people. Our emotions get in the way. We make split second decisions. And those decisions, once made, are fixed like cement. Unmovable.
That is why your friend who is dating that self absorbed guy who treats her like garbage, or the one who is with the jealous clingy girl who doesn’t want him around you, stays in that bad relationship. They had a bad picker. And everyone around them can tell them they’re nuts…but they won’t listen.
Or you hire that person that made a good first impression. And they worked out well for a while, then they leave and you’re left holding the bag and having to hire their replacement at the worst possible time.
Or you have a rental property and you find out after the first month that the tenant is a deadbeat who doesn’t pay their bills on time – or at all. And you spend the next several months trying to get them out.
So what is this silver bullet?
What is it that will help me choose better people in my life?
Thanks to Kevin Hogan at www.kevinhogan.com who’s weekly “Coffee with Kevin Hogan” email newsletter outlined the study below and commented that, “That which no one notices is often far more important in influencing things that really matter”.
So the secret of eternal life…well maybe not that…comes from a little-known study by the Fed (think the guys who set interest rates in the U. S.) and Equifax (the credit scoring company). And they did a little study about, of all things, the link between Credit Scores and Committed Relationships.
Specifically, “We examine how credit scores play a role in the formation of committed relationships—such as marriages and long-term cohabitations—as well as the couples’ ability to maintain the relationship. We also trace the dynamics of each partner’s credit scores and the couples’ use of credit over the course of being in a committed relationship.”
Here are some of their key findings.
- First, credit scores are positively correlated with the likelihood of forming a committed relationship and its subsequent stability.
- Second, partners positively sort into committed relationships along the credit score dimension even after controlling for other similarities between the partners.
- Third, a positive correlation notwithstanding, within-couple differences in credit scores are apparent at the start of relationships.
What does this mean?
- Couples in committed relationships have credit scores close to each other – and they get closer during the relationship
- Couples with mismatched credit scores (a big gap) – besides having and expected financial impact (the person with a low credit score is more likely to sabotage the relationship financially) is also linked to less trustworthiness
So what are some important takeaways from this?
As it relates to future long term relationships or marriage, just as pre-marital counseling, specifically around finances, is justified, comparing credit scores may be a similar good step. And if your scores differ dramatically, that is a red flag to consider.
What about when hiring staff? Since currently, “survey evidence suggests that up to 60 percent of employers run credit checks on potential employees as part of the hiring decision” (Chen et al., 2013), it is clear that employers are viewing creditworthiness as a factor.
But employers are largely looking at it from an “Are they responsible with money?” perspective. Now we know that an even more impactful questions are, “Are they trustworthy?” and “Will they stay committed to us or jump ship the first chance the get?”
And if they have credit problems that are resulting in a low credit score, it may be time to pass on that person from a potential trustworthiness perspective.
Obviously each situation is different and you need to use good judgment, but this is an interesting new tool in your toolbelt.
And if you’re on the receiving side of the credit inquiry, another good reason to check your credit report and clean up any issues fast.