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There is a great article called Fewer than 10% get out of Debt W/ Counseling or Settlement. The facts are rather disturbing but also appear rather accurate and cause one to ask, what’s the best procedure if in debt. See also my article Hierarchy of Debt.
There is an expert article written exploring the question above and the author went to the source of credit scores for an authoritative answer. See also my article Improving Your Credit Score..
My good friend Steve Rhode has an awesome article about The Truth About Failure Rates of Credit Counseling, Debt Negotiation and Bankruptcy. Everyone who is having any difficulty and considering what to do about their debt needs to read this well researched, factual and informative article. You will be very surprised by what you learn. See also my article The Truth About Debt Negotiation.
So very often I am asked about a ID fraud or company news on potential ID fraud and I draw a blank. But now there is a new tool at CreditReport.com with a new online tool called Identity Theft News. Simply go to Credit Report.com and on the banner at the top, click Identity Theft News. You will be brought immediately to a page with all that is listed for known cases involving ID theft. For more information see my article FREE ID-Theft-News Tool
I wrote an article at Cardratings.com which suggests Discover offers “teens a better way to manage their spending while developing smart money management skills. The Current Card model eliminates the risk of overdraft fees and helps protect teens from going into debt because they can’t spend more than the amount on the card.” See also my article Grading Campus Credit
How Is A Credit Score Calculated?The credit granting agency utilizes a computer software designed by folks such as Fair, Isaac. An acceptable point value is established based upon selected criteria which offers the lender insight as to the risk involved with getting the loan.
The loan applicant gives information to the lender which is submitted to a credit bureau. Per Fair, Isaac, the credit bureau then returns a: “credit bureau risk score, commonly known as a FICO score, [which] is a snapshot of your credit risk picture at a particular point in time.” Lenders can then determine, ‘If I give this person a loan or credit card, will I get paid back on time?’”
Is Credit Scoring Objectivity Questionable?Fair, Isaac concludes: “Computers don’t make lending decisions, lenders do. Computers analyze credit information to produce a score, but individual lenders decide what scores are acceptable for different loans or credit cards. ”
The problem is that subjectivity has been completely removed in the models. Models should make recommendations not decisions and that is usually not the case today… it is more “expeditious” and “efficient” to rely on the model. The model, then, has become the decision instead of the guide.
What’s the Benefit to Credit Scoring?Consider, what would happen without a model system? In many cases the result would be non standard chaos based upon subjective guesswork and prejudicial criteria. If I am a bald lender and very sensitive to long hair, isn’t it possible without a measuring standard to be prejudicial in my decision to loan out my money to a long haired rock musician?
Now add on something a little closer to reality like race, color, creed, etc. None of these should be permitted into the decision making process. But we all know of incidents with objective measures fully in place where it has still happened. How bad would it be without a system, any system, fully in place?
On the other hand, what would happen if very few applications were turned down? There is no standard so how am I, the lender, suppose to know who will and will not pay me back. I can’t predict the future. The very reputable and honest person in front of me may well have extraordinary events occur tomorrow. Without some measure of prediction, I could loose more loans then are paid back. That’s a tough way to stay in business and not to very welcome at the next meeting of the stockholders.
To learn more about what makes up a credit score see Credit Scoring Basics .
Not long ago I wrote an article for Cardratings.com in which I said, “College and university students wanting credit cards will soon encounter new legislation making it more difficult for them to get a card as well as more difficult for credit card issuers to market to students. ” See also my article Credit Card’s Dirtly Little Secrets.
CNN Reports the end of the “Cash for Clunkers” program: “Officials decided to wind down the program, which Congress passed to spur flagging auto sales, after determining that it would soon run out of money.” See also my article, Compound Interest in a Monthly Payment.
CNN Reports: “The first part of Obama’s crackdown on the credit card industry will give consumers more notice when contracts are changed and the option to reject interest rate increases” See also my article 40% Tax Free Pay Raise
CNN Reports - Over banking industry objections, congress has passed a bill that checks fees and rate hikes. The President is expected to sign it this week. See also my article, Credit Cards Dirty Secrets.