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Who stands to benefit from this new scoring model? Anyone who makes little use of banks, credit cards, or checking accounts. The “credit underserved” claims Fair Isaac Co, which includes young adults, low-income consumers, widows or divorcees, and immigrants. And while those in credit card and mortgage industry see this new scoring model as a potential benefit, those in credit counseling sector foresee potential problems.
Fair Isaac CEO Tom Grudnowski is excited about his company’s new credit-scoring resource. “This extension of FICO score gives lenders and other businesses another powerful tool ..., while expanding service options for consumers who have missed out on opportunities simply because they lack a traditional credit history.”
The opposition, namely debt and credit counselors, see both good and bad. Some consumers will benefit by qualifying for less costly credit arrangements. However, others could fall prey to becoming overextended unless they also receive some basic credit and debt education.
Tom Hicks, a credit counselor in Chicago, worries that “with average American household owing $8,000.00 in credit debt, this could open door to others finding themselves unable to handle credit properly. Ultimately burden lies with consumer,” he says.
Fair Isaac Co. estimates that at least half of those without traditional credit profiles will benefit from this new scoring method.
© 2005, http://www.yourfreecreditreportnow.com Author: James H. Dimmitt James is editor of “To Your Credit” a FREE weekly newsletter focusing on managing your personal finances and credit. Subscribe and get a FREE copy of your credit report when you visit: http://www.yourfreecreditreportnow.com