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Business Unplugged™
This blog features Carol Roth's tough love on business and entrepreneurship, as well as insights from Carol's community of contributors.

Measuring Creditworthiness Needs to Change

Written By: Catherine Morgan | No Comments

Carol takes credit scoring agencies to task in a recent post on the CNBC blog. Many of us were shaken up by the Equifax data breach and the subsequent fallout. In “The whole credit score model is ‘ridiculous’” Carol pulls no punches. She begins:

“Certainly, with the recent breach of their data and executives jumping ship, to say Equifax isn’t popular might be the understatement of the century. In fact, when asked for comment on the company, Andy Swan, founder of LikeFolio, a technology company that uses social data about consumers to produce investing insights, told me that Equifax is one of the most hated companies in the LikeFolio universe, posting worse consumer happiness scores than United Airlines after their recent incident involving a man being dragged from a plane.

However, apart from the direct impact of having sensitive personal data exposed—data that wasn’t even given to the company by the consumers—consumers have another beef with Equifax and its counterparts and that is its shoddy business methodology and model.

Credit scores lie at the center of Equifax’s model, both directly by providing them to would-be lenders and indirectly by allowing consumers to monitor those scores. However, these scores don’t make a lot of financial sense in many regards. Based on their convoluted calculations, a very wealthy individual that doesn’t use credit often could have a lower credit rating than someone who has few assets but lots of credit with low utilization.”

You will definitely want to check out the rest of the article here.

Article written by
Catherine Morgan is the editor of Business Unplugged ™, an engaging speaker, and the founder of Point A to Point B Transitions Inc., a virtual provider of coaching services to individuals who are in business or career transition. Catherine is the author of the eBook Re-Launch You: Discovering Your Point B and Embracing Possibility. An experienced independent consultant and former employee of three of the former Big Five consulting firms, Catherine combines strategy development with accountability coaching. Her productivity tips and career transition advice have been featured on WGN AM 720 and WIND AM 560 The Answer in Chicago, and on WCHE AM 1520 in the Philadelphia area. Catherine speaks frequently on topics related to productivity, career transition, small business, and entrepreneurship. She doesn’t take herself seriously, but takes her subject matter very seriously.