Lenders are looking at a wider range of your personal data in determining whether you're a good financial risk. And it's all under a cloud of secrecy they'll never share with you!
A would-be borrower may be denied a mortgage based on "stuff" they never know were relevant when applying for a mortgage loan. Federal regulations that will go into effect sometime in July 2011 will require lenders to disclose which factors they used, however, they will not be required to disclose the results of their underlying data and formulas. No one knows what the models are and how they are being used to calculate your financial health.
We're all familiar with FICO scores . . .
BUT WHAT ABOUT THESE?
- Deposit Behavior Score?
- Employment History Score?
- Job Security Score?
- Property Values Score?
- Income Levels Per Your Zip Code Score?
- Unemployment Rate Per Your Zip Code Score?
- How Often You Switch Jobs Score?
- How Often You Switch Your Phone Lines Score?
- Checking Account Managing Score?
- Overdrafts Score?
- Riskview Total Solutions Score?
And dozens and dozens more!
A FICO score is largely based on a person's payment history and the size of his debts.
FICO scores can be monitored for accuracy and can be corrected if errors occur, but the secrecy that surrounds these new scores makes it impossible for borrowers to know why they were denied credit. Mistakes can go undetected and, therefore, uncorrected. According to John Ulzheimer, the president of consumer education at SmartCredit.com, "Consumers have no clue how many times they're being scored."
Chi Chi Wu, a staff attorney with the National Consumer Law Center in Boston, states that "These scores are like black boxes...No one knows what the models are and exactly how they're being used, but the information can have a tremendous impact on people's lives." You can read the entire article here, "Cloud of Secrecy Surrounds New Credit Scores."
So, where will this 1984 Big Brother attitude stop in determining one's credit worthiness? Will they soon include my medical history in case I have a condition that might pose a credit risk? Will they monitor how many times I flush the toilet or how long my showers take to determine if I'm a conscientious environmentalist in conserving water? Will they check with my waste management company to see if I participate in recycling? Will they monitor how much junk food I buy at the grocery stores as my cravings potentially may pose a health risk? Heck, maybe they're already doing these . . . and, I'm sure, you can think of a few ludicrous "models" on your own.
Oh, Brother! I think I'll go take a cold shower now." A short one though!
Comments(0)