All articles tagged with #credit scores
FICO's announcement to provide its credit scores directly to mortgage industry players led to a 15% surge in its stock, while shares of credit bureaus like Equifax dropped significantly, reflecting a shift towards more direct and transparent credit scoring processes in the mortgage sector.
Gen Z's credit scores have dropped more than any other generation due to student loan debt and economic challenges, but improving credit habits like timely payments and low utilization can help rebuild scores.
US consumer credit scores have declined at the fastest rate since the 2008 financial crisis, with Gen Z borrowers experiencing the largest drops due to higher utilization and delinquency rates, especially related to student loans, while the median FICO score continues to rise.
Credit scores in the US are declining at the fastest rate since 2009, driven by high living costs, student debt, and economic disparities, with younger Americans especially affected by increased delinquencies and job market challenges.
Millions of low-income Americans face a dual threat as recent legal and policy changes could lead to increased medical debt appearing on credit reports and higher healthcare costs due to Medicaid and ACA cuts, potentially damaging their credit scores and financial stability.
The stock of FICO, the company behind the widely used credit score, plummeted over 17% after the Federal Housing Finance Agency announced that lenders can now use VantageScore, a competitor, to assess creditworthiness for government-backed mortgages, potentially increasing competition and reducing costs in the mortgage industry.
FICO is launching a new credit scoring model that will incorporate Buy Now, Pay Later loans, potentially affecting the credit scores of millions of Americans by providing a more accurate assessment of their creditworthiness, especially for younger and less established borrowers. However, adoption may be slow due to inconsistent data sharing among BNPL providers and credit bureaus, and concerns remain about the impact on vulnerable communities.
Nearly 2 million federal student loan borrowers could face wage garnishment this summer due to missed payments after pandemic relief ended, with defaults rising and credit scores dropping, prompting warnings from the Education Department and highlighting the ongoing debt crisis.
FICO will now include buy-now-pay-later (BNPL) data in its credit scores with the launch of two new scoring models, reflecting the growing use of BNPL services and aiming to provide lenders with a more comprehensive view of consumers' repayment behaviors. While this move is seen as a modernization of credit scoring, there are concerns about the potential impact on borrowers' credit profiles due to late payments and 'phantom debt.'
FICO announced it will now include buy now, pay later (BNPL) data in its credit scores, reflecting the growing impact of BNPL services like Afterpay and Klarna on consumers' financial lives and creditworthiness, enabling lenders to better assess credit risk.
A study by the Federal Reserve Bank of New York and Georgetown University reveals that individuals who develop Alzheimer's or similar dementias often experience significant financial difficulties, such as falling behind on mortgage and credit card payments, years before their diagnosis. This financial decline mirrors the cognitive deterioration associated with the disease.
A study found that wiping out $169 million in medical debt for 83,401 people did not significantly improve their mental health or credit scores on average. The debt relief had no impact on financial distress or mental health, and only slightly increased credit scores. The results were unexpected and mirrored a previous study on cash transfers, suggesting that insufficient relief may raise feelings of distress. The study raises questions about the effectiveness of medical debt relief and its impact on recipients' well-being.
Some consumers are regretting using buy now, pay later (BNPL) services due to overspending and financial strain, with one individual accumulating $6,000 in BNPL loans over two years. Financial experts warn of risky spending on BNPL platforms, as users tend to consume extra and incur more fees and interest. The Consumer Financial Protection Bureau found that BNPL users had higher credit card utilization rates and lower credit scores than non-BNPL borrowers, with Black and Hispanic consumers being more likely to borrow on BNPL. While BNPL services offer payment flexibility, some lawmakers and consumers are calling for more scrutiny and caution when using these services.
Child identity theft, where parents steal their children's identities to access debt, is a widespread problem that can have devastating consequences for the victims. Studies have shown that children are 51 times more likely to fall victim to identity theft than adults. In many cases, the perpetrator is someone the child knows personally, such as a parent or relative. The motivation behind these crimes is often financial desperation or addiction issues. Victims of child identity theft face the unique dilemma of reporting their parents for committing a crime or being held responsible for their parent's fraudulent spending. Authorities should take more action to prevent child identity theft, such as defaulting to locked credit and personal information.
The average credit score in the US is 716, with the oldest generation, the silent generation (78+), having the highest average score of 761, while Gen Z (18-26) has an average score of 680. Factors such as credit history, payment history, amounts owed, recent credit activity, and credit mix contribute to credit scores. To improve credit scores, individuals should focus on making timely payments and keeping debt levels low. While a perfect score of 850 is not necessary, aiming for a mid-700s score can help secure favorable interest rates.