The easiest way to never miss late payments on your personal loans

Seeing your credit score in bill statements can lower delinquency rates and actually improve these influential three-digit scores, new research finds.

Researchers discovered a “significant decrease” in the probability of late payments when student-loan borrowers could see their FICO FICO, -0.38%  scores, and concluded that the three-digit score was a powerful and positive form of feedback.

Those who actually viewed their scores made changes to their behavior and reaped even greater rewards, including an average 8.2-point increase in their score.

In an experiment using more than 400,000 clients of student-loan lender Sallie Mae SLM, +2.56% researchers found:

• Borrowers receiving quarterly emails telling them about their updated FICO scores were 4% less likely to have an account that was 30 days past due.

• Those who actually viewed their scores made changes to their behavior and reaped even greater rewards, including an average 8.2-point increase in their score.

The researchers at Yale University, the University of Chicago and New York University said it was heartening that the score’s inclusion “appears to spur positive change among a relatively young population that is new to credit and may, therefore, yield long-term benefits.”

It’s easy to understand why borrowers responded to the three-digit score.

FICO scores, a credit rating named for the Fair Isaac Corporation, play an important role in securing all sorts of consumer goods, from credit cards to automobiles and houses. FICO scores range from 300 to 850 and the scores are a key basis for loan rates and credit cards offers.

Last September, FICO said the average American credit score was 704. When the experiment started, the average of the entire study sample was 674, after about six and a half years of credit history.

Don’t miss: Stop obsessing over your credit score—just do this

Falling behind on debt payments are one way someone’s score can make a sudden drop — not to mention an easy way to incur costly late fees.

Some 20% of consumers’ credit accounts are hit with late fees every quarter, according to the Consumer Financial Protection Bureau. Americans paid an extra $11 billion annually on those late fees, the agency said in its 2015 estimate.

Some 20% of consumers’ credit accounts are hit with late fees every quarter, according to the Consumer Financial Protection Bureau.

There were more than 250 million consumer accounts across the country offering free access to FICO scores last year, according to the latest study, which was circulated by the National Bureau of Economic Research, a research organization based in Cambridge, Mass.

But seeing a credit score can only accomplish so much. If consumers can’t afford the payment, the score won’t change the situation — and it might create more anxiety and/or shame about their debt that could prevent them from taking action.

Consumers had $14 trillion debt as of the first quarter, and student loans account for $1.5 trillion of that debt load. Critics of the U.S. college system say student-loan bills are simply too high, especially for recent graduates.

A Sallie Mae spokesman noted all private student-loan customers and co-signers receive free access to their FICO score once every quarter. “When accessing their score, customers also learn what key factors influenced their score,” he said. “Customers also receive email reminders when their credit scores have been refreshed each quarter.”

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