Credit Characteristics, Credit Engagement Tools, and Financial Well-Being

34 Pages Posted: 30 Oct 2019

See all articles by Eva Nagypal

Eva Nagypal

Consumer Financial Protection Bureau

Jeremy Tobacman

Alfred Lerner College of Business and Economics, University of Delaware

Date Written: September 17, 2019


This report presents results from a joint research study between the Consumer Financial Protection Bureau (CFPB) and Credit Karma. Credit Karma describes itself as “a personal finance technology company” that “offers a suite of products for members to monitor and improve credit health.” The purpose of the study is to examine how consumers’ subjective financial well-being relates to objective measures of consumers’ financial health, specifically, consumers’ credit report characteristics. The study also seeks to relate consumers’ subjective financial well-being to consumers’ engagement with financial information through educational tools. A better understanding of these relationships helps uncover the factors that work together to determine consumers’ financial well-being and helps inform the CFPB’s long-term strategy for improving financial capability.

Financial well-being is measured using the CFPB’s Financial Well-Being (FWB) Scale which results in a FWB score. The scale was administered through a voluntary survey that resulted in close to 3,000 de-identified observations on respondents’ FWB score matched with background, credit report, and website usage data. The main takeaways are as follows:

• A consumer’s credit score is very strongly positively correlated with the FWB score, with a correlation coefficient of 0.44.

• There is a positive correlation between age and the FWB score, but this correlation all but disappears when controlling for credit score.

• In addition to credit score and age, the study identifies seven credit report variables and three engagement variables that correlate strongly with a consumer’s FWB score.

- Credit Report Variables: Credit card limits, holding a credit card, and the number of accounts recently opened with a balance all correlate positively with a consumer’s FWB score. Credit card utilization, the number of revolving accounts, the number of collections in the past two years, and having a student loan all correlate negatively with a consumer’s FWB score.

- Engagement with Credit Karma Platform Variables: A consumer’s FWB score correlates positively with the number of times the credit simulator was used and the number of times credit factors were reviewed. Finally, FWB score correlates negatively with the number of emails from Credit Karma opened in the last sixty days.

This is the first study of its size to study the relationship between financial well-being and credit score and other credit report variables, on the one hand, and engagement with financial information, on the other. The observed correlations might be causal (with changes in the credit and engagement characteristics in question leading to higher FWB scores) or they might be explained by reverse causality or omitted variables like the propensity to plan. Either way, the results are intriguing and warrant further study of these relationships as the CFPB develops its strategy for improving financial capability using the concept of financial well-being.

Suggested Citation

Nagypal, Eva and Tobacman, Jeremy, Credit Characteristics, Credit Engagement Tools, and Financial Well-Being (September 17, 2019). Consumer Financial Protection Bureau Office of Research Reports Series No. 19-7, Available at SSRN:

Eva Nagypal (Contact Author)

Consumer Financial Protection Bureau ( email )

United States

Jeremy Tobacman

Alfred Lerner College of Business and Economics, University of Delaware ( email )

Newark, DE 19716
United States

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