Consumer services

Ask consumers to check their credit scores

image: In a new study, Megan Hunter, an assistant professor of marketing at Boston College, and a colleague found that credit scores changed for consumers after viewing their scores. For some consumers, their credit ratings then plummeted after viewing their ratings.
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Credit: Lee Pelligrini

Chestnut Hill, Mass. (02/10/2022) – For some consumers, it may make more sense for them to avoid certain information they receive about themselves.

That’s according to a recent study that found that, for some consumers, checking a credit score ultimately leads to a lower score, according to Megan Hunter, assistant professor of marketing at Boston College. Carroll School of Management.

Hunter and a colleague studied data on the actions people took when a consumer services company reminded them to check their credit scores and the subsequent impact on those scores, said Hunter, co-author of the report in the newspaper. Marketing science.

The study’s most intriguing findings focus on consumers with declining credit scores. First, these consumers were more reluctant to check their credit score, Hunter said. And those who saw their scores drop were less likely to check their score the following month — an indication that this consumer segment hasn’t tried to make changes that would improve their scores.

The researchers looked at what happened when the company asked its users – via email – to check their credit scores.

“Users who are on a downward trend in their credit rating, when prompted to verify their credit rating, upon verification, their rating drops an additional 23 points,” Hunter said.

The researchers found different results for consumers whose credit scores were stable or improving.

“For users with an up or flat credit score, when checking their score, their score goes up an additional 9 points,” said Hunter, who added that the results were similar for consumers with low, medium and high credit ratings.

Hunter said the findings are important for companies that disclose personal financial information to their customers. Computer simulations conducted by Hunter and co-author Jessica Fong of the University of Michigan, also showed that sending such information can reduce consumer retention and hurt outcomes for some consumers.

Information avoidance has been a subject of study for several years. Hunter said many of the results were surprising.

“We would have expected that for a user who avoided looking at their credit score, seeing that they were doing poorly – or had a declining credit score – they would have been inspired to work to improve their credit score, but instead we see that they are doing worse,” Hunter said. “Furthermore, we find that this result holds even for users in the top tercile of credit scores.”

But for users whose credit scores are on the rise, upon verification, their credit score increases an additional 21 points, Hunter said, noting that higher credit scores are difficult to improve.

Hunter said the next steps in the research will be to determine the driving forces behind these findings. Among the factors that deserve more attention are the roles of credit card debt and debt repayment strategies.

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