Why Teaching Kids About Credit Can Score Points with Their Parents
August 13, 2019 by Miriam Rozen
Prepare a fingertip-ready roster of recommendations for credit-card and credit-building best practices if you want a handy tool to build relationships with next-generation clients, according to financial advisors who have done so with success.
Wide swaths of the population share little knowledge about credit-card and credit-building best practices. One in five consumers gets dinged for late fees on their credit accounts each quarter, according to a newly released study conducted by researchers from the University of Chicago, Yale and New York University.
The researchers engaged in a field experiment and found that by intervening and giving 400,000 student loan borrowers information about how their FICO scores were built, they reduced their late payments.
“Survey data show treatment group members were less likely to overestimate their FICO Scores, suggesting the intervention may correct for over-optimism,” write the coauthors, whose study entitled “Does Knowing Your FICO Score Change Financial Behavior?” was published by the National Bureau of Economic Researchers (NBER).
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