Bad credit? You might need to work on your patience

Patience is a virtue – one that benefits your personal finances, researchers have found.

A new study shows impatient people have lower credit scores.

Economists, working at the U.S. Federal Reserve’s Center for Behavioral Economics and Decisionmaking at the time of the research, recruited 437 low-to-moderate income participants to examine the psychological factors that explain why people default on their mortgages. The participants were asked to fill out a questionnaire, in which they were required to make choices between smaller immediate rewards or bigger rewards later. They also gave researchers access to their credit scores.

Impatient participants, those who chose the immediate rewards, had poorer credit scores.

“Conceptually, it does make sense that how people discount the future, i.e. how impatient they are, affects their decision to default on their loans,” researcher Stephan Meier, who is now at Columbia University, said in a press release. “Individuals accumulate debt and then have to decide whether to repay the money or use the money for something else?”

He noted that while people don’t always default on a loan deliberately, some may resort to “strategic defaulting,” making decisions based on having more money now and face the consequences later.

Patience is a quality embraced by some of the world’s most financially savvy.