New Credit Score Models May Help Consumers with Little Credit History

The NY Times Money Adviser has a report on new credit scoring models that rely on such data as rent and cellphone payments not used in traditional score models. The idea is to help lenders find consumers who are credit-worthy who may not have established credit histories. About 45 million Americans lack traditional credit files. These consumers may have never had a credit card or they may have had financial difficulties and stopped using credit resulting in spotty credit histories.  Many lenders will not lend to people with credit scores of under 620; alternative data might improve their scores. FICO recently...

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CFPB Orders TransUnion and Equifax to Pay for Deceiving Consumers in Marketing Credit Scores

The Consumer Financial Protection Bureau today announced it has taken action against Equifax and TransUnion for deceiving consumers about the usefulness and actual cost of credit scores they sold to consumers. The companies also lured consumers into costly recurring payments for credit-related products with false promises. The CFPB said that from 2011 to March 2014, TransUnion and Equifax falsely represented that the credit scores they marketed and provided to consumers were the same scores lenders typically use to make credit decisions. In fact, the scores were not typically used by lenders. Plus, TransUnion and Equifax falsely claimed that their credit...

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FICO on Understanding Credit Scores

FICO on Understanding Credit Scores FICO credit scores are used by 90% of lenders. For a thorough explanation of how FICO scores are computed, go to FICO’s website, myfico.com. FICO’s booklet on the subject covers the subject, which you may download here.

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Millions of Consumers Are “Credit Invisible”

Millions of Consumers Are “Credit Invisible” The Consumer Financial Protection Bureau has a report on the 26 million Americans who are “credit invisible.” The Bureau found that one in every 10 adults do not have any credit history with a nationwide consumer reporting agency. About 189 million Americans have credit records that can be scored. The report also found that Black consumers, Hispanic consumers, and consumers in low-income neighborhoods are more likely to have no credit history with a nationwide consumer reporting agency or not enough current credit history to produce a credit score. Another 19 million consumers have unscored...

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How Hard and Soft Inquiries Affect Credit Scores

How Hard and Soft Inquiries Affect Credit Scores Consumers are often confused about the effect of inquiries on their credit scores. CreditCards.com consulted experts about the differences between hard and soft inquiries, how the big three credit bureaus’ report on inquiries, and inquiries’ effects on credit scores. Their experts explained that a hard inquiry means the consumer actively applied. for credit. Soft inquiries are reported anytime you review your own personal credit report, your credit is evaluated by existing creditors, or you receive a promotional credit card offer in the mail. Soft inquiries have no impact on your credit report...

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