Can a Personality Test Replace a Credit Score?

Christine DiGangi

While credit reports and scores are vital to getting loans in the U.S., a project called the Entrepreneurial Finance Lab is taking a different approach to determining creditworthiness using a personality test of sorts. Small-business loan applicants in developing countries can get approved based on the program’s test, rather than their credit histories.

EFL uses psychometrics, literally “measurement of the soul,” to gauge a range of skills and personality traits. Applicants take a questionnaire with statements like “A big part of success is luck,” and their answer of true or false helps determine their EFL score, which lenders can use when making loan decisions. The test is designed to give insight into a person’s character, intelligence, business skills and attitudes.

We have an established credit system in the U.S. that compiles data on customers’ and businesses’ credit usage, but in countries where such structures don’t exist or aren’t as consistent, business owners may have trouble securing loans. Without an understanding of the applicant’s credit history or financial behavior, lenders can’t be sure if the borrower is worth the risk.

This credit reporting discrepancy among countries of varying wealth bleeds into the economy. Small businesses contribute to more job growth and business activity in developed countries than they do in poor countries, according to a New York Times story on the program.

Plenty of people and businesses may find themselves struggling to get loans without a credit history, no matter where they are. Could something like this meet entrepreneurs’ needs in the U.S.?

Maybe. Gerri Detweiler,’s director of consumer education, says she didn’t see an obvious barrier to trying such a concept, though what we have in place works pretty well.

“As long as it doesn’t discriminate against any prohibitive factors — like race, gender, national origin — and it’s for business not for personal use, I can’t imagine why it couldn’t be tested in the U.S.,” she says. “They’re trying to measure character, ‘Is this person likely to pay their loans on time?’ and we have a pretty robust credit reporting system that lets lenders look at that.”

EFL’s method is about as accurate as credit history when assessing risk, the project’s website says, and it has processed more than 73,000 applications. It’s available in 20 countries and 24 languages. Whether or not you repay debts on time can certainly say a lot about your character, but it’s interesting to see how that can be measured with a test, rather than a history of behavior.

Intriguing as the concept may be, entrepreneurs in the U.S. aren’t testing into business loans with their personalities, so establishing a good credit history is a must. If you want to see where your credit currently stands, check out the Credit Report Card, a free tool that gives you two free credit scores and grades you on each of the major credit scoring factors.

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