Are you impatient? Your credit score may be suffering

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Impatient people have lower credit scores.

If you think about it, this is pretty self-evident, and if it wasn't obvious to you, it's probably news you could have used before the holiday shopping onslaught, and not after when you're in full-throttle bill paying mode. Nevertheless, a study, which debuts in the January issue of Psychological Science, shows that there may be a trait shared by a lot of people with lower credit scores. They're impatient.

Columbia Business School professors Stephan Meier and Regina Pitaro and Stanford University's Charles Sprenger came up with this conclusion, thanks to an experiment conducted at the Federal Reserve's Center for Behavioral Economics and Decisionmaking, and yes, they really spell "decisionmaking" as one word. Not a decision I agree with, but I digress.

The study

The researchers were trying to find the reason some people default on their mortgages, but their conclusions, as you'll see, can easily be extrapolated to consider how people pay their credit cards, auto loans and any other bill. They found that people with low credit scores were more likely to select immediate rewards rather than waiting for a larger reward in the future.

How did they determine that? Meier and Sprenger went to a community center that offered tax preparation help and sought out 437 customers with low to moderate income. They were able to get everyone to agree to have their FICO credit scores accessed and were offered cash rewards ranging from accepting $22 in cash right away or waiting a month and then getting $50.

Many of the people took $22, and the people who took the $22 had the lowest credit scores in the bunch, under 620. The people who were willing to wait for their money generally had a credit score about 30 points higher.

What this means for the rest of us

Of course, what the study may have failed to consider is that when you're short of cash, it may not be impatience that is driving some people to choose short-term rewards, like not paying a bill and keeping the money, over longer-term rewards, like paying the bill and avoiding the late fees and the stress that comes with being late with a payment.

It may be sheer desperation driving the poor financial decisions, and a desperate, cash-poor person might conclude that if they accept quick cash now, they may pay a bill off faster and avoid a late fee. Someone who accepts $22 now versus $50 later may need the money immediately in order to buy groceries and feed their kid. There are a whole host of psychological and financial reasons that go into why and how people spend money, especially those who don't have much, far beyond who is patient and impatient.

One of the researchers, Meier, in a press release that Columbia Business School sent out, stated as much. But he feels that there is still something to the impatience factor, explaining: "There is a little bit of strategic defaulting going on, where some people make a cost-benefit analysis and choose to have more money now and deal with the repercussions later."

True enough, and it certainly makes sense that some people make foolish decisions, particularly with what they spend on a credit card, due to simply wanting something now rather than waiting until later when they have the money to pay for it.

So if you went overboard in your holiday shopping and had to max out credit cards or take out loans to do it, you have been warned. Your downfall of spending too much during the holidays may not be because you're lousy at math, or you have an overly generous spirit. You may have a low credit score because you're one of those people who reads the ending of a book before you start it.

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