If there is one thing we’ve come to learn about the credit reporting industry it’s that it is always changing. And NCES founder, George Cole, is predicting big changes for credit scores in 2017.
There are still the same three big players (Equifax, TransUnion, and Experian), but the way they do business is changing over time.
For one, consumers are getting smarter and reporting fraud and abuses more often – keeping the credit reporting companies under the watchful eye of the Consumer Financial Protection Bureau (CFPB). They are getting fined by the government and Congress has held hearings to investigate these abuses.
Lawyers are cashing in on the rampant abuses of the Fair Credit Reporting Act and filing lawsuits every day against all three credit reporting companies. Each individual lawsuit is no more than a slap on the wrist, but they are adding up and getting the attention of the media.
Another way credit reporting is changing is in how credit scores are being calculated. Today, thanks to the vast amount of data available to the credit reporting industries, they are no longer just looking at your credit card accounts, loan history, and public records.
New sources of data available to them include banking history, 401K accounts, investment accounts, rental history, and utility accounts. From these numbers, the credit reporting companies and lenders can get a pretty good estimate you income, too. (Something that has never been a part of credit score calculation before.)
A good credit score (alone) does not mean you’re a good risk…
Why are the credit reporting companies interested in this additional financial data? Because the traditional way to calculate credit risk is no longer accurate enough. Banks are losing money on loans made to people with high credit who had no financial resources to actually pay for the loan given. In other words, the traditional FICO score is no longer an accurate indicator on a person’s likelihood of default. (And when it comes down to it… that’s all the lenders really care about, isn’t it?)
Isn’t that crazy? A high credit score is no longer a reliable measure of creditworthiness!
As George Cole always says, “You’ve got to stay in front of the game.”
In 2017, that will mean paying EQUAL attention to your credit score AND your financial worthiness.
Different credit scores in 2017 is a good thing…
There is good news because of these changes… your credit score will be less of a factor in lending decisions soon. Your overall financial position will also weigh in heavily. That means that consumers with lower credit scores with cash on-hand may get approved over those with higher scores and no cash available.
Spread the word!! It’s critical to STAY IN FRONT OF THE GAME!
If you have any questions, please give us a call at 770-952-5168 or contact us online.
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Other articles that may interest you:
How Do I Get A Better Credit Score?
Keeping the Wolves at Bay – Safely Communicating With Debt Collectors
How To Erase A Tax Lien From Your Credit Report
This information is intended for informational and educational purposes only and not as legal advice. If you have concerns about your credit report, harassment, identity theft, illegal collections activity, garnishments, or property liens, you should consult an attorney who specializes in consumer rights and defense.