The U.S. Consumer Financial Protection Bureau (CFPB) selected Assistant Professor Rourke O’Brien to present his paper about the impact of FICO score knowledge on financial behavior. O’Brien’s presentation is part of the CFPB Research Conference on May 3 and 4.
O’Brien and colleagues conducted a study with more than 400,000 Sallie Mae student loan borrowers to test the impact of a person viewing their FICO Score on a range of financial outcomes. Through a multi-year randomized control trial (RCT), they found that student loan borrowers nudged to view their FICO Score had on average fewer past due accounts and a higher FICO Score one year later. The study is the first to demonstrate that viewing one’s FICO Score has a positive effect on financial behaviors.
Lenders use FICO (Fair Isaac Corporation) Scores to help them make billions of credit-related decisions every year. Sallie Mae offers education loans for undergraduate, graduate, and professional students to help bridge the gap between personal resources and financial aid.
Borrowers in the treatment group received quarterly email nudges to log in to Sallie Mae’s website and view their FICO score. Those in the control group received no email nudges but could still access their score.
Abby Sussman of The University of Chicago and Tatiana Homonoff of New York University conducted the trial with O’Brien.
The two-day conference highlights research on consumer finance that can inform researchers and policymakers. Six panels of researchers will present their work, with members of CFPB’s Office of Research serving as discussants.