Do Impatient People Have Lower Credit Scores?

January 6, 2012

in News

Do Impatient People Have Lower Credit Scores?

Impatience, it turns out, can be costly. New research suggests that people who opt for smaller rewards today over bigger rewards later also tend to have lower credit scores. In the study, co-authored by Columbia Business School professor Stephan Meier, the most impatient people had credit scores below 620, which means they pay more for loans. Meier and his co-authors offered 437 low- to moderate-income participants bigger cash rewards if they were willing to receive the money later. They correlated the participants’ willingness to delay their cash rewards with their FICO score, a commonly used credit score. The participants who were most willing to wait for their cash rewards, had, on average, FICO scores that were 30 points higher than those who were the least patient. People with lower credit scores often have a harder time getting loans, and they pay more for the loans they do get. Are you the kind of person who is willing to deny yourself some pleasure today in order to reap greater rewards later? If the answer is yes, you probably have an easier time saving money and, it now appears, maintaining a healthy credit score. [Read this article]

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