Your Credit Score Could Predict Executive Decisions

A CEO’s personal credit score might reveal more than their financial habits—it could predict how they’ll make crucial business decisions under pressure.

New research from Ohio State University shows that executives with subprime credit scores are twice as likely to follow advisory recommendations, even when those suggestions prove counterproductive. Meanwhile, their colleagues with prime credit scores critically evaluate external advice and adapt based on real-world experience.

The study analyzed 303 C-suite executives from mid-sized companies through a controlled experiment that simulated high-stakes supply chain decisions. Each executive faced ten rounds of inventory investment choices while receiving advisory recommendations and experiencing random business disruptions.

The Yes-Person Problem

“Responsible CEOs do not want executives who are going to be ‘yes persons,’ they want someone who evaluates data objectively,” said Noah Dormady, associate professor at Ohio State’s John Glenn College of Public Affairs and co-author of the study. “That’s the issue we’re picking up in this study. Executives with higher credit scores were much more likely to think thoughtfully and critically about the data and make objective decisions.”

The experiment placed executives in realistic scenarios where they had to decide whether to stockpile inventory as protection against potential catastrophes like hurricanes or supply chain disruptions. These decisions involve significant opportunity costs, as excess inventory ties up capital that could be invested in productive equipment or workforce.

What surprised researchers was how consistently credit scores predicted decision-making patterns. Executives with subprime scores (below 680) showed a 39% overall treatment effect when receiving advice, compared to just 20% for those with prime credit ratings.

Learning From Experience vs. Following Orders

The study revealed something particularly striking about how different executives process information over time. Prime credit executives adapted their responses based on accumulated experience, while subprime credit executives maintained compliance with external recommendations regardless of proven accuracy.

By the sixth decision period, prime credit executives who experienced fewer disasters than expected were 15% less likely to follow “invest” advice compared to their subprime counterparts. This gap widened to 23% by the tenth period, suggesting that executives with higher credit scores increasingly trusted their own judgment over external guidance when the advice proved inconsistent with reality.

“Those with higher FICO scores were more confident to make their own decisions, possibly because the financial decisions they made in their personal lives worked out well, compared to those with lower FICO scores,” explained Yiseon Choi, doctoral student and co-author.

The Bottom Line Impact

These behavioral differences translated into measurable profit variations. When advice conflicted with actual disaster patterns, prime credit executives consistently outperformed their subprime colleagues. The profit analysis revealed that executives with prime credit scores made better decisions especially during periods of high uncertainty, while subprime executives’ adherence to advice often led to suboptimal outcomes.

Particularly notable was the finding that subprime credit executives continued following advice even after nine rounds of evidence contradicting the recommendations. This suggests a fundamental difference in how these executives weigh external authority versus personal experience.

Beyond Personal Finance

“This is important because prior research suggests that personal financial habits may extend to professional decision making,” Choi noted. The study controlled for income effects by focusing exclusively on high-earning C-suite executives, isolating the psychological factors that influence credit scores rather than purely financial ones.

The research builds on established findings that credit scores predict various behaviors beyond financial risk, including job performance, health outcomes, and relationship stability. However, this study marks the first time researchers have demonstrated that credit scores can predict how executives process risk information in corporate settings.

“Executives with subprime credit were more likely to simply defer to the appointed advisors, even disregarding their lived experience,” Dormady observed. “That suggests executives with lower credit scores are more likely to be the type of decision maker who follows consensus over fact.”

Ethical Considerations

While the results are statistically robust, Dormady emphasized that using credit scores for executive screening raises complex ethical questions. Ten states have already banned credit checks for most employment decisions, though financial industry positions are typically exempted.

The researchers call for additional replication studies and careful guidelines to prevent misuse of credit score data in hiring decisions. However, they suggest the findings could have particular relevance for roles involving public safety, emergency management, or critical infrastructure decisions where the ability to critically evaluate external information becomes especially important.

As businesses face increasingly complex supply chain challenges and economic uncertainty, understanding how executives process risk information could prove crucial for organizational resilience and decision-making effectiveness.