Bounced Checks Can Thrash Your Credit Ratings
Did you know roughly 50 million American adults had no real credit history or have had them spoilt? This amazing piece of statistic is revealed by none other than the discoverer of the classic credit score system FICO. This includes new immigrants in a significant way.
Bounced Checks Will Be Considered As Defaulted Payments
Millions of young Americans and new immigrants are finding it difficult to avail credit facilities and open credit card accounts. This is in contrast to the daily quota of mail box full of offers to issue pre approved credit cards to other citizens.
Looking at the travails of this big chunk of community FICO is considering devising a new method which addresses the issues faced by those who want to avail this facility and those who want to lend to them.
There may be arguments against this new step that it brings in new ways for people to mess up their financial lives. But let’s face it. The question of acting against bounced checks arises in the last. Credit scores go spiraling only if you miss payments. So what constitutes the entire scheme is the service it does to the new 50 million people who virtually don’t have access to low cost and qualified credit.
Does It Connect To My Credit Report, At All?
In fact, FICO is proposing to devise this program a bit differently rather than basing the score calculation on the credit report information. This, they call as expansion FICO score. This is based on non traditional information sources.
* Rent to own stores
* Payday loan lenders
* Databases monitoring bounced check cases
However there are still some unmet and loose ends in this system. Fair Isaac is still to find a creditable database for rent paid records. This also includes the rent-to-own purchases. This new expanded scoring system may put paid to checking account holders who are in the habit of bouncing checks.
Even if you belong to that target group, it is better than maintaining a 100% to 300% rate of interest on a payday loan or rent-to-own.
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