4 Reasons Why Work Opportunities Are Like Applying for a Loan (and Why You Need a Co-Signer)

Original post:  www.analogyadvisor.com
Image credit:  “Loan” (CC BY 2.0) by GotCredit

You start a new job.  You're skilled. Confident. Ready to dig in your heels to rise to the top.  The first week goes by pretty smoothly -- you met the team, learned some history, attended some meetings, and got an overall sense of your new home.  The next week comes and, huh... still a lot of introductory work, no big deal.  Things will surely pick up by the one month mark.

So it's been a month now, and you've finally been given some real work to do.  Busy work, that is.  Heh, it must be some sort of initiation!  So you'll serve your time another week or two and move on to meaningful work.

Geez!  It's been three months now!  And you still haven't really lived up to your true potential.  Sure you learned a lot in the beginning, but now it feels like you're floating sideways.  You've asked for more challenging work multiple times, but your manager seems to just brush it off.  "You'll be given new opportunities as they come".  " I want you to focus on your assigned tasks". "Let's check back in during your performance review".  Performance review?!  That's not for another 9 months!  All your peers will surely leave you in the dust by then.

Where did things go wrong? Don't they know what your degree is in?  Don't they remember your qualifications from the interview?

Here's a thought -- did you check your credit score?  Your credibility credit score, that is.

Believe it or not, increasing your work responsibilities is a lot like applying for a loan.  Here are a few reasons why:

When you apply for a loan, both you and the creditor are considering a risk.  On your end, you are taking on a financial opportunity that would normally not be available to you.  The idea here is that you'd work hard and provide an ROI to the creditor in exchange for their risk-taking. On their end, the question is simple: is there a reasonable chance this person will pay me back?

Will this person deliver on this new responsibility or make a fool out of me?

You should know your financial health when applying for a loan.  Consider a mortgage.  Before talking to any lenders, the logical first step is to do a financial health checkup to determine how much home you can afford today.

How much responsibility can you reasonably handle with your current experience and life situation?

We learned in 2008 that blindly pursuing the biggest mortgage someone is willing to give you was a terrible idea.  People were in over their heads and went bankrupt.  Their credit score suffered.

Don't blindly pursue the highest possible roles unless you're sure you can deliver -- riding fast and falling hard will leave a black mark on your permanent record.

Lendors learned a lot from the housing bubble.  As a result, its much harder now to get a mortgage.  Consider that your manager may have been burned in the past by being too liberal with a hot shot who had a high risk tolerance.

Loans require a proven record.  And the definition of "proven" is always decided by the lender.  You may have an excellent track record of paying your friends back.  Hell, you even have their recommendations! The lender doesn't care, because to him/her it's not proven.

They won't always consider your school projects or internship experience as credibility.

But it shouldn't matter, because you saved up a lot of money -- surely you're a low risk candidate if you have all that cash to fall back on.  Unfortunately in the lender's world, that doesn't count either -- all they care to know is how well you pay back your debts.

Being involved in a field of work for a long time does not guarantee opportunity -- managers care more about how you handle accountability.

The track record needs vary by lender.  Some are more liberal with risk, while others are very conservative.  Risk tolerance is often highly influenced by availability of options.  If there are lots of folks in line for the same lender, then they need only choose the safest bet.  If the competition is stiff, consider working your way up to the challenge.  Go for the low balance department store credit card before pursuing the Chase Sapphire.

Don't expect opportunities to come easily if they are the sexy, lucrative sort -- less attractive opportunities can be a more practice way to build credibility.  

But what if you really want that Chase Sapphire card and truly believe you can handle it?  This brings us to the last point:

You can lower your risk with a co-signer.  Naturally, when you don't qualify for a credit card or car loan, you turn to your parents for help.  "Can you co-sign on this car for me?".  If they agree, the lender's attitude will do a 180.  "Of course I'll do the loan!" (if this kid can't make the payments, I'll just turn to the parents to collect).  In short, you piggyback your parent's financial credibility to secure a car ownership opportunity.  The risk of default drops substantially (assuming your parents have good credit) because in the end, they are accountable for your behavior, and are putting their money on the table if things go awry.  

Find someone senior to you in the organization to be your co-signer.  You can piggyback their well-established credibility to secure lucrative work opportunities otherwise unreachable. 

Now that you have your shiny new car and a intimidating load to pay back, it's extra important to follow through on your financial commitment.  Mom and dad are very proud of you, and put their financial health at stake to help you be successful -- The LAST thing you want to do is let them down, let alone wreck havoc on their financials!

Once you have your stretch opportunity, it is CRITICAL that you deliver.  Failure at this point would destroy your relationship with the co-signer and set the precedent for your future opportunities -- it is a risky move that should be strategically made.

After 5 challenging years, you paid off your car loan in full -- congrats!  Take the time to thank your parent's again and use that shiny car to drive them to a nice dinner.  They may need some help with the garden too -- have your shovel handy.  Your co-signer did a big favor for you -- make sure you return the favor in any way you can.  

Career co-signers are a rare and generous bunch, so it is to your best interest to cultivate a lasting, mutually-beneficial relationship.

There you have it.  Next time you feel like your not being considered for new opportunities, think of your manager as lender, and consider from their perspective what your credibility score might look like.  Consider the size of the loan, AKA the impact of default on your manager.  Lastly, consider one of two action plans:

1. Build your credibility naturally with smaller loans over time.
2. Find yourself a co-signer for that big loan and be prepared to deliver.

Good luck out there and remember:

With great credit, comes great responsibility