Traits Signal Credit Score

Jun 20, 2012 by Kurt

Credit score too high you say? Here, try these.

Are young, twitchy, southern U.S., male, smokers bad credit risks compared to older, even-tempered, northern, non-smoking women? Evidently. According to a recent article on CreditCards.com, studies show a correlation between certain traits and credit scores.

Human Traits and Credit Scores

The credit reporting bureaus (and every other company that sells something) are watching you. And so are the academics. Understanding who you are and tracking what you do translates to cash. In a cursory look at research on humans and credit scores, the CreditCards.com article highlights five traits and their correlation to scores.

1. Manliness: Based on the Experian National Score Index, the average credit score for women is seven points higher than the average score for men: 682 vs. 675. Not a whole lot we can do about this one guys, so I guess we just have to suck it up and once again tip our hats to the superior sex. (Is there anything besides pattern baldness that guys are better at than women?)
2. Smoking: Though the severely addicted may disagree, here’s a trait you can do something about. University of Minnesota researchers concluded that smokers’ credit scores lag non-smokers’ by about 30 points. Though the researchers speculate the difference may be attributable to risk-taking and impulsive behavior, I’d propose a less nuanced theory: Cigarettes suck huge cash out of the family budget!
3. Youth: The CreditCards.com article calls this trait “you’re a child of the ‘80s (or ‘90s)”: 19-29 year olds have an average credit score of 672 compared to 829 for those over age 66. That’s not surprising to me, given the decades of earning money and paying bills that 66+ year olds have under their belts. And to be convinced there’s something uniquely sinful credit-wise about today’s young people, I’d have to see the same comparison for earlier generations. (Of course a generation ago no company had yet discovered the big money to be made inventing and then marketing credit scores, so a meaningful comparison is problematic.)
4. Impatience: I get this one. The inability to delay gratification or wait for an outstanding value before purchasing would, all else being equal, likely lead to less success financially.
5. You Live in the South: Harlingen, Texas has the lowest average community credit score in the U.S. Of the top ten U.S. cities with the lowest credit scores, eight are in the south. (Four of these eight are in Texas.) Meanwhile, eight of the ten cities with the highest credit score are in the Midwest; Wausau, Wisconsin is #1. Go Packers.

What Shall We Conclude, If Anything?

If a resident of Harlingen, Texas moves to Wausau, Wisconsin, is the individual’s credit score apt to rise? I think not, unless several other leaves are overturned at the same time.

If someone learns to delay gratification and wait for sales and other deals before buying stuff, will his or her credit score be affected? Could be, if nothing else changes and the new-found behavior leads over time to more cash savings.

If smokers quit, will their scores increase? I’d bet yes, just because cigarettes are so costly, directly and indirectly.

Will credit scores rise as consumers get older? For most, probably, but not without diligence about budgeting, saving, and living below one’s means.

Gender? I haven’t yet heard of anyone undergoing gender change to boost a credit score. But the day is young.

Copyright secured by Digiprove © 2012 Kurt Fischer