You are here: Home Empirical Microeconomics Workshop, Tatiana Homonoff, New York University

Events Calendar

Previous month Previous day Next day Next month
By Year By Month By Week Today Search Jump to month
Empirical Microeconomics Workshop, Tatiana Homonoff, New York University
Friday, October 06, 2017, 02:00pm - 03:30pm

Tatiana Homonoff, New York University
Do FICO Scores Influence Financial Behavior? Evidence from a Field Experiment with Student Loan Borrowers

This paper evaluates the impact of providing access to FICO scores on financial knowledge and behavior. We conduct a field experiment with over 400,000 student loan borrowers in which we randomize provision of information on the availability of the score. We estimate the impact of the intervention on financial outcomes using administrative credit report data. Borrowers in the treatment group are less likely to have any payments past due, more likely to have at least one revolving credit account, and have higher FICO scores after nine months. These effects persist over the full study period (21 months), even among a subgroup of borrowers whose communications are discontinued. We complement findings from our administrative data with a financial literacy survey of a subset of these student loan borrowers. We find no difference in general financial knowledge across treatment conditions, but find that treatment group members were more likely to accurately report their own FICO score; specifically, they were less likely to overestimate their score. These results suggest that the intervention may have led borrowers to calibrate their financial health and take actions to improve it. We argue that the unique characteristics of the FICO score—a personalized, quantifiable, dynamic metric that responds to consumer behavior—may be more effective at motivating change than other information based interventions.

Location  NJ Hall 3rd Floor Library
Contact  Bingxiao Wu

Contact Us

New Jersey Hall, Room 202
75 Hamilton Street, (CAC)
New Brunswick, NJ
08901-1248
P  (848) 932-7363 (undergraduate)
P  (848) 932-7451 (graduate)
F  (732) 932-7416
Thomas Prusa - Department Chair
Donna Ghilino - Senior Department Administrator
Barry Sopher - Undergraduate Program Director
Hilary Sigman - Graduate Program Director
Undergraduate Inquiries - Help and Advising
Graduate Advisor