Anatomy of the Credit Score

This paper addresses the question of what determines a poor credit score. We compare estimated credit scores with measures of impulsivity, time preference, risk attitude and trustworthiness, in an effort to determine the preferences that underlie credit behavior. Data are collected using an incentivized decision making lab experiment, together with financial and psychological surveys. Credit scores are estimated using an online FICO credit score estimator based on survey data supplied by the participants. Preferences are assessed using a survey measure of impulsivity, with experimental measures of time and risk preferences, as well as trustworthiness. Controlling for income differences, we find that the credit score is correlated with measures of impulsivity, time preference, and trustworthiness.