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With credit a hot topic in today's society, social media is more than skeptical when it comes to the FICO credit score and what financial problems a bad credit score can potentially cause.
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Credit Criticism: Why Credit Checks Might Cause Financial Problems
With credit a hot topic in today's society, social media is more than sceptical when it comes to the FICO credit score and what financial problems a bad credit score can potentially cause. Although a person's credit score can provide a lot of insight into possible risk due to poor money management, debt load, or existing financial problems, it can also cause financial problems that didn't exist before hand due to poor risk management, employment decisions, or impacted living.
Risk Management Great credit scores don't mean great customers, and the when lazy lenders look at the number instead of the whole inquiry, they put their clients at risk. For example, an elderly woman with a credit score of 680 might qualify for a great rate, but she wants to borrow money to take care of funeral costs for her husband. She has a small pension, several credit cards and with her husband’s passing, has lost a second income. Realistically, extending this woman more credit could actually put her at risk for future financial problems, primarily because a number can't assess her situation on a personal level.
Employment Decisions Top of his class, graduate with honours, four years of experience, and he aced the interview! The young man in question is a prime employment candidate - that is, until his boss runs an inquiry. Although Experian, Equifax, and TransUnion have stated on record that they do not provide employers with a score, they do provide them with a record that can reveal previous jobs, past addresses, aliases, and financial information such as recent inquiries, debts and legal actions. When an inquiry reveals an applicant has some serious financial problems, he or she may be denied a position based on information that is not representative of their workplace abilities.
Quality of Life Every citizen has a right to a safe place to sleep, and by law are required to carry insurance when driving. Using credit to determine if an individual qualifies for a roof over their head or denying them the ability to abide by the law due to financial problems isn’t just immoral, it’s unlawful, and concerns over increased use of FICO scores to ostracize individuals with financial problems may soon force government bodies to step in and say enough is enough when it comes to inquiry. Until then, individuals can only try a clean record by making timely payments, avoiding collections, and removing unwanted inquiries with the help of Inquiry Busters to ensure they aren’t denied important opportunities.
