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Credit & You

Updated: Mar 7, 2022

Your creditworthiness is vital because it determines your credit score and helps creditors decide whether you will get a new credit card. Learn more!

Credit & You - How important you are when it comes to your credit

Credit scores are primarily based on the data and information in your credit report. The score ranges from 300 to 850, and when you have a higher score, it means you are more creditworthy. Credit card issuing companies and banks often examine credit scores when reviewing applications. The question is: how important are you when it comes to your credit, or does your personality affect your credit? Read on!

What is Your Creditworthiness?

Before you apply for credit, it is crucial to know the factors or aspects that qualify you for it. Banks and credit companies have specific criteria that help them decide whether to issue a credit card or loan money. Creditors determine your creditworthiness by gathering essential information on you. For instance, are you willing to repay the debt? Your character or personality is one of the factors that creditors consider when you apply for the credit.

Besides capacity and capital, your character plays a crucial role in determining your credit score. It refers to how you have handled past debt obligations. Creditors will review your personal background, honesty, morality, trustworthiness, and reliability.

The Importance of Your Personality and Character

Your personality traits and character are an essential aspect of creditworthiness assessment. The idea is that your character is indicated by your track record or managing credit and making payments on time. Bear in mind that past defaults show irresponsibility and negligence, which can negatively affect your credit score. According to Fair Isaac Corporation (FICO), creditors review various personality traits when determining your credit score.

The most relevant characteristics are impulsiveness, locus of control, fluid intelligence, confidence, conscientiousness, and delayed gratification. These personality traits enable creditors to determine applicants with a higher likelihood of repaying their loans. Most credit card companies have implemented a specialized program known as psychometric assessment.

It involves a series of questions to evaluate your personality and character before issuing you a credit card or determine your credit score. The assessment is based on your personality traits, such as:  Confidence  Responsibility  Self-control  Social desirability Banks and creditors use such questionnaires to know who you are and what is your socioeconomic background, education level, and behavior.

Creditors ask informal questions, such as do you have the right attitude toward friends? How often do you make your bed? Do you help your spouse? Are you annoyed when stuck in traffic? Do you take a different route to the office on different days? All these questions enable creditors to look into your soul and analyze your personality. The purpose is to determine whether you can take risks and how patient you are when it comes to personal and financial difficulties. That way, they make an informed decision and figure out if you qualify for the credit.

Final Words

Credit scoring programs, models, or algorithms consider various factors, such as your payments, the amount owed, missed payments, and your personality and character. Bear in mind that your personality traits evaluated through psychometric testing play a crucial role in determining your credit score.

Author~ Tonia Lewis

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