How Much Can A Credit Score Tell You About A Person?
In an ideal world, a credit score would tell you nothing about a person except, well, their history of handling credit. Increasingly though companies and other entities are trying to use credit scores as proxies for indicators about a person’s general success at life.
A new working paper published by the U.S. Federal Reserve Board finds that the higher someone’s credit score is, the higher his or her chances of a lasting relationship will be.
A trio of economists parsed data from the Fed’s consumer-credit panel to identify the credit scores of couples in committed relationships. People tend to form committed relationships with people whose credit scores are in the same range, the study found. And couples with high credit scores tend to stay together longer.
If you’ve ever heard that couples who stay together begin to look more alike, it probably won’t surprise you to learn that researchers noted that the longer a couple stayed together, the more similar their scores became. (Although similarity at the beginning of the relationship is a good sign. If the difference between a couple’s scores is less than 66 points initially, they are less likely to split up later.)
This can’t really be news. We already know, after all, that wealthier people tend to have more stable relationships, largely, of course, because money has tremendous power as a solver of problems. Wealthier people likewise probably have higher credit scores, because they don’t have to deal with the kind of challenges that can ruin a person’s financial reputation.
Older people have better credit scores too, because we millennials are still figuring things out and getting our priorities in order.
Millennials and Baby Boomers also differ in their approach to debt. Millennials were nearly twice as likely as Boomers to say that they’d consolidate credit card debt in order to spend more and are more likely to plan on using personal loans to pay for a wedding or vacation. …
Millennials have the lowest VantageScore of all generations, with an average score of 625 out of 850, according to Experian. (The national average is 667.) Millennials owe an average of $52,000 and have an estimated average income of $34,430.
With millennials like this lady running around, that can’t be too surprising either.
Still, we’re about two steps from assigning citizens a Life Score the way China supposedly intends to.
In China, the government has decided to take credit scores to a whole new level, turning them more into a life score by tracking anything and everything you do. And by 2020, this score will be a mandatory part of every Chinese citizen’s life. … All social networks in China are run by either Alibaba or Tencent. The government has access to all this social data, tracks it, and tweaks scores based on it. These companies are in charge of keeping your score up-to-date. Assets, income, and credit history still play a part in the scoring, but so does political opinion. If you post a negative political comment or political thoughts without permission, your score goes down. Mention a particularly sensitive issue (e.g. Tienanmen Square massacre) and expect your score to be negatively impacted even further.
That’s a bit scary. Let’s continue trying to assess individuals as individuals, shall we? For as long as we’re still allowed.
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