Does Knowing Your FICO Score Change Financial Behavior? Evidence from a Field Experiment with Student Loan Borrowers
One in five consumer credit accounts incur late fees each quarter. Evidence on the efficacy of regulations to improve behavior through enhanced disclosure of financial product attributes is mixed. We test a novel form of disclosure that provides borrowers with a personalized measure of their creditworthiness. In a field experiment with over 400,000 student loan borrowers, treatment group members received communications about the availability of their FICO Score. The intervention significantly reduced late payments and increased borrowers’ FICO Scores. Survey data show treatment group members were less likely to overestimate their FICO Scores, suggesting the intervention may correct for overoptimism.
We gratefully acknowledge Marianne Bertrand, Anat Bracha, Michael Collins, Jacob Goldin, Sam Hartzmark, Emir Kamenica, Neale Mahoney, Sanjog Misra, Devin Pope, Justin Sydnor, Oleg Urminsky, George Wu, and participants in seminars at NYU, Rutgers, USC, USMA-West Point, Washington University in St. Louis, Wharton, Wisconsin, Yale, the Federal Reserve Bank of New York and in the Chicago Booth Behavioral Approaches to Financial Decision-Making Conference, Cornell IBHF Conference, Boulder Summer Conference on Consumer Financial Decision Making, the CFPB Research Conference and the Advances in Field Experiments Conference for conversations and suggestions that have greatly improved the quality of this project. We also thank Jennifer Chellew, Monica Milone, Ryan Corey, Annat Shrabstein, and Marie O'Malley from Sallie Mae as well as Joanne Gaskin and Jenelle Dito from FICO for their assistance throughout the project. Nicholas Herzog provided excellent research assistance. All remaining errors are our own. This work was supported by the True North Communications Inc. Faculty Research Funds at The University of Chicago Booth School of Business. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- Quarterly emails about logging on to the Sallie Mae website to view FICO scores affected patterns of debt repayment. Failing to make...
Tatiana Homonoff & Rourke O'Brien & Abigail B. Sussman, 2021. "Does Knowing Your FICO Score Change Financial Behavior? Evidence from a Field Experiment with Student Loan Borrowers," The Review of Economics and Statistics, vol 103(2), pages 236-250. citation courtesy of