In the world of consumer credit scoring, there’s always something new, more “accurate,” and even more intrusive than the credit reporting that has preceded it. One of the latest attempts to delve into consumer behaviors and reduce them to a single number is the CoreScore from CoreLogic.
The CoreScore promises to base its score on a new consumer credit report that looks at “non-traditional” data that might not be included on a traditional credit report from one of three major credit bureaus: Equifax, Experian, and TransUnion. By considering information not included in current credit reports, CoreLogic expects to provide lenders – especially mortgage lenders – a more complete picture of your financial habits.
What Goes Into the CoreScore?
The CoreScore isn’t meant to compete with the FICO score, which is the most widely used consumer credit score method. In fact, FICO is working with CoreLogic to develop the CoreScore. The new score is supposed to supplement the FICO score: A mortgage looks up your FICO score and taps your CoreLogic credit report to find the CoreScore. The CoreScore is supposed to predict where your FICO score is headed, and both of these scores combined then provide a picture of your finances that includes possible trends.
How It Differs From FICO
Some of the items included in the CoreScore, which aren’t all included in your “regular” FICO score, encompass:
- Applications for payday loans
- Rental payments (especially missed payments that have gone to collections)
- Car payments
- Tax liens and judgments
- Missed child support payments
Some of the information above, such as a car loan, already appears on your credit report. However, this information isn’t as detailed on a traditional credit report. The record of your car loan, and how much you owe, is listed, but your payment history might not be. The CoreScore report changes that.
Additionally, the CoreScore report digs into court records to provide information on missed child support and other legal matters, such as tax liens and judgments against you. Your past financial missteps – even if you live mostly “off the grid” – have more of an impact when it comes to the CoreScore.
Not only does the CoreScore take into account more information, but the CoreLogic consumer credit report also rapidly lists the information. For instance, a new mortgage might not make it to a traditional credit report for 60 days. But that same mortgage makes it to a CoreLogic report, to be used as part of the CoreScore, in as little as 23 days.
The folks at CoreLogic are constantly digging through public records in order find your latest financial information. They then use it to put together a consumer profile of your habits that is more detailed than ever before.
In 2012, CoreLogic hopes to evaluate the usefulness of including your payment history on cell phone bills and utilities. This means that your non-credit payments could become a regular part of your credit profile. For those who pay on time and wish that this information was included, this development is positive. However, for low-income consumers struggling with job loss and mounting bills, including that information will only make matters worse.
How Are CoreScore and the CoreLogic Report Being Used?
So far, the exact scoring method for the CoreScore is still being worked out, but the score is expected to roll out in March 2012. Even though the official CoreScore isn’t quite ready, the credit reports the score will be based on, from CoreLogic, are already available and some mortgage lenders are already using the CoreLogic credit reports as part of the qualification process.
To Determine Approval and Interest Rate
When combined with a more traditional credit score, the CoreLogic credit report provides additional insight into what might happen if a borrower is approved.
The credit report also influences the interest rate a borrower receives. If your CoreLogic credit report shows something unfavorable that may not be reflected in your FICO score, the lender might decide to bump up your interest rate. A higher interest rate on a mortgage worth hundreds of thousands of dollars can make a huge difference in how much you pay over the life of your loan.
To Evaluate Consumers and Employees
CoreLogic’s credit report is available to multiple lenders right now, and the CoreScore is being marketed to lenders and non-lenders alike. Just as the FICO score has become used by insurers, and just as your credit report is of interest to some employers, CoreLogic hopes that others will begin using the CoreScore as a way to evaluate consumers. The CoreLogic report could eventually be used by insurers to help set health insurance premiums, by employers to determine whether to hire you for a job, and by landlords to determine whether to rent to you after a background check.
How Will the CoreScore Affect You?
If you have a relatively clean credit record right now, the addition of new data from a CoreScore could bring to light information that wasn’t previously accounted for, which could bring down your overall credit rating. If you have been trying to avoid notice by shunning credit cards and other loans, you might suddenly find yourself “on the grid” due to the intensive public records searches conducted by CoreLogic. For those who have little credit history, but a solid record of on-time bill and rental payments, however, the CoreScore could boost their credit situation.
For most people, though, the CoreScore is likely to have a negative impact, as it represents yet another attempt to take complex financial interactions and reduce them to a single number.
While the CoreScore may not make or break your chances of loan approval, it could cost you more money. A CoreScore that seems to indicate that you have a higher chance of default, even if you have a decent FICO score, could lead to a higher interest rate and more spent on fees. And if insurers, cell phone providers, and landlords decide to use the CoreScore, you could see an increase in premiums and security deposits.
Furthermore, if employers use the CoreLogic credit report, they could delve deeper into your past and discover items that result in rejection for your latest job application.
Accessing Your CoreLogic Credit Report and Your CoreScore
The CoreScore is not yet available. However, FICO and CoreLogic expect that once the scoring model is finished and once financial services providers start using it, you will be able to purchase your score, similar to how you can purchase your FICO score presently.
Your CoreLogic credit report, though, is currently available to you. Under the terms of the Fair Credit Reporting Act, you are entitled to one free copy of any consumer credit report each year, and this includes your CoreLogic report. You can contact CoreLogic for information about obtaining your free report at 877-532-8778.
Additionally, at some point in 2012, the CoreLogic report is expected to be added to AnnualCreditReport.com so that it is easier to access, in addition to the credit reports from the three major credit bureaus.
Be sure to check the information on your CoreLogic report, and dispute inaccurate information. In order to dispute information, you should have documentation proving that it is inaccurate. Like other credit reporting agencies, CoreLogic is required to investigate disputes and correct errors on your report.
The CoreScore offers one more profiling tool for financial services providers to make snap judgments about your ability to handle money, from which they base big decisions about your financial future. This in turn means you need to take better care to avoid any financial missteps or late payments – and you have to be vigilant to protect yet another credit report against inaccurate information. But keep your credit clean and strong, and the CoreScore could provide you an opportunity to stand out against the competition – other borrowers – when seeking a loan, a rental, or even employment.
Have you checked your CoreScore? What are your feelings on this new credit reporting method?
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