The Effects Geographic Location and Age Have on a Credit Score
Term Project
The Effects Geographic Location and Age
Have on
A Credit Score
Nicholas Rogers
EC315
10 March 2013
TABLE OF CONTENTS
PURPOSE STATEMENT AND MODEL………………………………………………………..3
DEFINITION OF VARIABLES…………………………………………………………………3
DATA DESCRIPTION…………………………………………………………………………..5
PRESENTATION AND INTERPRETATION OF RESULTS………………………………….7
WORKS CITED…………………………………………………………………………………10
DATA SOURCES……………………………………………………………………………….10
REGRESSION ANALYSIS AND CORRELATION MATRIX……………………attachment 1
PURPOSE STATEMENT AND MODEL
With the current state of the economy and job market in the United States, many individuals are shocked to hear that credit scores are becoming even more important now than before not only when it comes to making purchases or financial decisions, but also in other aspects of their everyday life. According to Forbes.com staffer, Heather Struck, in A Bad Credit Score Affects A Lot More Than Credit, ones FICO score can affect their ability to get a job, their insurance rates, and even how their personal relationships work out (2011). Some people have differing opinions on what can hurt or help a credit score. To keep from going into each of those possible outcomes, I am just going to pay attention to geographic location and age of the person seeking credit. The purpose of this project is to see what, if any, effect where a person lives and his age will have on his credit score. The dependent variable, CREDIT SCORE, is determined by the independent variables of geographic location (geo_loc) and age. The primary independent variable in this relationship is age or length of credit history because it has the most weight in the calculation between the two variables. According to a graph from MyFico.com, this is responsible for 15% of how a FICO score is obtained (MyFico.com, 2013). A person’s age is important to factor into a credit score. In general,
The Effects Geographic Location and Age
Have on
A Credit Score
Nicholas Rogers
EC315
10 March 2013
TABLE OF CONTENTS
PURPOSE STATEMENT AND MODEL………………………………………………………..3
DEFINITION OF VARIABLES…………………………………………………………………3
DATA DESCRIPTION…………………………………………………………………………..5
PRESENTATION AND INTERPRETATION OF RESULTS………………………………….7
WORKS CITED…………………………………………………………………………………10
DATA SOURCES……………………………………………………………………………….10
REGRESSION ANALYSIS AND CORRELATION MATRIX……………………attachment 1
PURPOSE STATEMENT AND MODEL
With the current state of the economy and job market in the United States, many individuals are shocked to hear that credit scores are becoming even more important now than before not only when it comes to making purchases or financial decisions, but also in other aspects of their everyday life. According to Forbes.com staffer, Heather Struck, in A Bad Credit Score Affects A Lot More Than Credit, ones FICO score can affect their ability to get a job, their insurance rates, and even how their personal relationships work out (2011). Some people have differing opinions on what can hurt or help a credit score. To keep from going into each of those possible outcomes, I am just going to pay attention to geographic location and age of the person seeking credit. The purpose of this project is to see what, if any, effect where a person lives and his age will have on his credit score. The dependent variable, CREDIT SCORE, is determined by the independent variables of geographic location (geo_loc) and age. The primary independent variable in this relationship is age or length of credit history because it has the most weight in the calculation between the two variables. According to a graph from MyFico.com, this is responsible for 15% of how a FICO score is obtained (MyFico.com, 2013). A person’s age is important to factor into a credit score. In general,
Cited: Average Credit Scores by State. (2011). Retrieved February 17, 2013, from governning.com: http://www.governing.com/gov-data/economy-finance/average-credit-score-by-state.html How Your Age Affects Your Credit Score. (2005). Retrieved February 17, 2013, from BCSAlliance.com:http://www.bcsalliance.com/credit_averagescores.html National Average Credit Score. (2013). Retrieved February 17, 2013, from Money-zine.com: http://www.money-zine.com/Financial-Planning/Debt-Consolidation/National-Average- Credit- Score/ The Relationship between Credit Scores and Age. (2012). Retrieved February 17, 2013, from FreeScore.com: http://www.freescore.com/credit-score-and-age.aspx What’s in my FICO Score. (2013). Retrieved January 27, 2013, from MyFico: http://www.myfico.com/crediteducation/whatsinyourscore.aspx Struck, H. (2011, July 20). A Bad Credit Score Affects A Lot More Than Credit. Retrieved January 27, 2013, from Forbes: http://www.forbes.com/sites/heatherstruck/2011/07/20/credit-score-fico-can-hurt-you/ DATA Average Credit Scores. (2013). Retrieved March 09, 2013, from CreditReport.com: http://www.creditreport.com/creditscores/creditratings/average-credit-scores.aspx Median age, by state. (2010, June 10). Retrieved March 09, 2013, from USAToday: http://usatoday30.usatoday.com/news/nation/census/median-age-by-state.htm