A recent study conducted by professors from Columbia and Stanford (Stephan Meier and Regina Pitaro) indicates that there is a connection between a person’s patience and their credit score.  The study performed on 437 people of low to moderate income in Boston featured a detailed questionnaire designed to test whether the subject would rather have an immediate reward or a larger reward in the future.

Essentially the professors paid people to take the test.  Applicants were given a choice of how they were going to be paid.  Applicants could be paid $27 immediately or $50 in two months.  Additionally, the questions in the test were intended to determine whether the applicants would take a short term reward over a long term larger reward.

The researchers were also granted permission to see the test applicants’ FICO scores.  The tests revealed a significant correlation between low FICO scores and the applicants with the greatest bias toward short term rewards. 

What is Patience Worth?

The test conclusively showed that applicants who were willing to delay reward for a greater reward in the future had on average a FICO score that was 30 points higher than applicants who opted for a short term reward. Moreover, applicants who opted for the short term reward generally fell below the subprime cut off of FICO score 620.

People with scores below 620 will face limited options for credit and significantly increased costs of borrowing across all categories.  This means they pay more for home loans, car loans, credit cards, and personal loans. 

Interestingly, these results have been duplicated in other situations showing that a lack of patience correlated to poor health decision and other types of poor financial decisions such as defaulting on mortgages and other financial obligations.

What Can You Do if You Have Poor Credit?

First, be patient.  All credit problems can be fixed with the proper advice and a little patience.  Here at creditsense.com we specialize in helping people like you improve your credit score and learn ways to solidify it above 800.  While you should also learn to plan ahead and deny yourself short term gratification in order to have larger gains later, you can also take active steps through our credit repair and optimization program to earn and maintain stellar credit.