Working Paper: NBER ID: w26048
Authors: Tatiana Homonoff; Rourke O'Brien; Abigail B. Sussman
Abstract: 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.
Keywords: FICO Score; Financial Behavior; Field Experiment; Student Loans; Consumer Credit
JEL Codes: D14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Intervention (D74) | Reduction in Late Payments (G33) |
| Intervention (D74) | Increase in FICO Scores (G51) |
| Viewing FICO Score Page (G51) | Decrease in 30-day Late Payments (G21) |
| Viewing FICO Score Page (G51) | Increase in FICO Scores (G51) |
| Intervention (D74) | Decrease in Likelihood of Being Classified as Subprime Borrower (G51) |