Fact Checked

New research suggests knowing your FICO® scores can impact your financial life

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Checking an email alert is a small action that could make an impact on your credit health.

Student loan borrowers who checked their FICO® scores for free — after receiving a monthly email alert — saw an average credit score increase of about 8 points over a yearlong period compared with borrowers who didn’t receive any email alerts, according to a recent study by the National Bureau of Economic Research (or NBER).

The study also found that borrowers who received these alerts were 4% less likely to miss a monthly account payment. While this difference might seem small, a missed payment can have an impact on a borrower’s FICO® scores. In fact, payment history is one of the biggest factors that can impact your FICO® scores.

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How could credit score awareness help borrowers with their finances?

The NBER study suggests there could be a link between awareness and an improvement in credit health. This could also be useful at a time when average credit card interest rates are rising, because higher scores and stronger credit histories could help borrowers qualify for better terms — including lower interest rates — on their accounts.

Those with higher credit scores have higher inquiry rates, possibly helping their credit health because they aren’t applying for too much credit at once, according to a recent Consumer Financial Protection Bureau study. The CFPB also suggests one of the reasons for this timing is people’s growing awareness of their credit scores.

But your credit profile is about more than just credit scores. Keep in mind that those numbers might not reflect everything that lenders consider on applications.

What can you do to learn more about your credit health?

If you’d like to check your credit scores or credit reports, here are some resources that could help.

About the author: Paris Ward is a content strategist at Credit Karma, providing readers with the latest news that will aid their financial progress. She has more than a decade of experience as a writer and editor and holds a bachelor’s… Read more.