From that article: "A number of people (Slacktivist, Kevin Drum, Matt Yglesias, Megan Mcardle) are debating the use of credit scores in employment. Credit scores are useful at predicting all kinds of things including, for example, car accidents so there is good reason to believe that they are useful in employment."
I now seriously question anything further in that article. The idea that credit scores can predict car accidents is ludicrous. The author probably meant that credit scores can be used to predict claims on automobile insurance, but that, too, is just as incorrect. Consider that many people with low credit scores are going to buy the least expensive vehicles and insurance they can find. This means carrying liability-only coverage, which does not pay to the insured, just to anyone the insured might hit. That means that the insurer is now using the credit score of the insured to "predict" the decision of a completely unknown third party who may or may not even exist.
Credit scoring, when used outside the context of granting credit (and, often, even in that context), is simply a way to continue to gouge people who have, for whatever reason, a damaged set of credit reports long after that damage has occurred.
I now seriously question anything further in that article. The idea that credit scores can predict car accidents is ludicrous.
Do you find the idea that credit scores are correlated with car accident rates to be ludicrous?
I find it very plausible. Some people are careful, others are careless.
Of course, one should be very careful in using vague correlations to determine policy in specific cases. I bet I could draw up a correlation one way or the other between accident rates and skin colour, but you'd be in serious trouble if your insurance company tried to use that to set premiums. (Oddly though, they're allowed to take your sex and age into account.)
I now seriously question anything further in that article. The idea that credit scores can predict car accidents is ludicrous. The author probably meant that credit scores can be used to predict claims on automobile insurance, but that, too, is just as incorrect. Consider that many people with low credit scores are going to buy the least expensive vehicles and insurance they can find. This means carrying liability-only coverage, which does not pay to the insured, just to anyone the insured might hit. That means that the insurer is now using the credit score of the insured to "predict" the decision of a completely unknown third party who may or may not even exist.
Credit scoring, when used outside the context of granting credit (and, often, even in that context), is simply a way to continue to gouge people who have, for whatever reason, a damaged set of credit reports long after that damage has occurred.