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.