The following article is a guest post from Suzan Bekiroglu about credit report. If you want to write a guest post in this blog, you can send me an email here.
Taking care of your credit, protecting your credit scores and trying to maintain a good credit history has always been important. Now, however, there is a whole new list of things to worry about in regards to your credit history, and the new list is much more personal.
FICO, Fair Issac Corp, scores are a standard way of determining the credit-worthiness of a potential borrower. Now FICO is developing a new set of standards using more personalized information in order to achieve that determination.
FICO and CoreLogic, a data provider, are currently developing a tool that will incorporate child support payments, evictions, payday loans, standing on utility bills, cell phone payments and rent when analyzing the risk of a borrower. Currently, the big three credit reporting agencies, TransUnion, Experian and Equifax, are offering lenders the option to find out the estimated income of the consumer.
Before the housing bubble burst, borrowers were targeted and offered approval on mortgages regardless if the borrowed seemed to present a risk or not. This allowed individuals to obtain mortgages they really could not afford and pretty soon, the bubble burst. Since then, loan requirements have become increasingly stringent as banks work to recover the losses and try to protect themselves from it happening again.
Before the FICO-CoreLogic partnership, your score would have included information like payment history, amount of debt owed, length of credit history, any new or recently opened accounts or line of credit and types of credit card and amount of credit card debt.
It is still essential to manage your credit card debt, but the new inclusion of more personal information may be helpful for those who choose to not have any type of credit card or those that have little credit history. Your history of payments is still one of the criteria in determining credit worthiness that carries the most weight. If you do have credit cards, it is vital to your credit score to stay on top of your monthly balance and staying within the acceptable credit card balance without going over the limit.
As credit reporting agencies increase the amount of data into a credit report, there is greater chance for black marks and negative entries to affect your credit worthiness. These additions are being touted as a great way to look at the bigger picture of an individual loaner, but it does make one wonder where the line will be drawn when data mining into an individual’s life.
With CoreLogic’s new data assessment, improving credit scores may become more difficult. CoreLogic combines tax information, credit scores, credit card debt, payday loan information, eviction reports, criminal background records, motor vehicle information, legal data, property tax liens and even payment history for cell phone bills and utilities.
Having a good credit score opens the door to loans with lower interest rates. Lowered interest rates will end up costing the borrower less money on the final purchase than higher rates and require smaller monthly payments than high-interest rate loans, which all translates into more money in the customer’s pocket.