Impatient? It May Be Hurting Your Credit Score

CBS MinnesotaA reproduction of the Stanford marshmallow experiment.

    Remember when you were a kid and your parents harped on the importance of “delayed gratification” to get ahead in life? (You know: Put that birthday money in the piggy bank and save for something nice, instead of blowing it all now on Milky Way bars.)

Well, it turns out that your propensity to wait (or not) is also reflected in your credit score, according to a study from researchers at Columbia and Stanford published online in Psychological Science, a journal of the Association for Psychological Science. (Here’s a link to the press release, though the journal itself is behind a pay wall.)

    Patient people, the study found, tend to have higher credit scores than those who just can’t wait. “Individuals who are more willing to delay gratification have significantly higher FICO scores,” the report concluded.

In the study, researchers recruited 437 low- to moderate-income people from a Boston community tax-preparation center. Participants consented to give researchers access to their credit reports and FICO scores ( a number from 300 to 850 based on credit history). Participants were given a series of questions meant to gauge their willingness to delay a reward. For instance, they were asked if they would rather have $70 now, or $80 in a month.

    Participants who were the most willing to wait for the bigger payout had FICO scores that were roughly 30 points higher than those who were least willing to delay, the study found. (The correlation held, regardless of income and other factors). Those who were the least willing to delay fell below the subprime credit score cutoff of 620, below which people generally pay much higher borrowing costs.

Stephan Meier of Columbia Business School, one of the study’s authors, said the report is sort of an adult, financial version of the “marshmallow studies” done with children, in which kids were left alone in a room with a single marshmallow but told they could have two to eat if they waited until the researcher returned. (Follow-up studies, he said, found that the kids who waited tended to do better in school later on).

Obviously, for some people, the loss of a job or a divorce can have a bigger impact on their credit score than their level of patience. But still, for individuals, Professor Meier said, the findings suggest that those who have trouble postponing rewards might want to consider tactics like automating their monthly credit-card payments to reduce the temptation to pay just the minimum balance.

“I have some problems in this area with food,” he said. “So I make sure my fridge isn’t full.”