New CoreScore credit report tracks more personal data than ever
Yvonne Zipp/Kalamazoo (MI) Gazette and MLive.com
17 February 2012
KALAMAZOO - It's time to check your credit score.
Starting in March, Americans will be getting a brand-new number -- one that's based on information that banks typically haven't had access to when deciding whether to offer someone a mortgage or credit card.
The new CoreScore, which rolls out March 30 in a partnership between CoreLogic and FICO, tracks data such as whether people have paid their rent and utilities on time, whether they have a child-support judgment against them, if they have applied for a payday loan (and repaid it) and whether they have ever been evicted. It also tracks whether a homeowner is underwater on his or her mortgage, meaning they owe more than the house is currently worth, or if they've paid their association dues or had a lien placed against the property.
"It's going to be a change," said Dorothy Barrick, group manager and financial counselor at GreenPath Debt Solutions, a non-profit financial advisory firm with offices in Portage and Battle Creek. While lenders are "very aware" of the new CoreScore, so far, she said, "it's been very hidden from the public."
The information is public record, but it's never before been tracked in such a comprehensive way, both supporters and opponents say. It also comes at a time when banks already have tightened lending standards. The new information means that people may find black marks on formerly pristine credit scores, and the score could make life more difficult for those already living paycheck to paycheck.
'The credit report that changes everything' CoreLogic, which calls it "the credit report that changes everything," says that the new number is not out to hurt consumers and in fact could help so-called "thin filers," who don't have much of a credit history but have been responsible about paying other bills. But credit counselors say the score is going to be more advantageous for banks than consumers, giving them more information about people applying for loans than ever before.
"I can see how it would be a good enhancement for a lender," said Barrick, citing rental history, underwater mortgages and property-tax components as particularly useful knowledge for lenders. And she said that she can think of instances where the new score could benefit individuals. "We often see people who don't use credit cards. They pay in full in cash, even for cars, and they struggle to get things because they don't have enough positive factors. I think this credit report may help those individuals," said Barrick.
But economically struggling families are likely to be adversely impacted by CoreScore, she said.
"Typically, the people with lower incomes are the ones who are past due on utilities and are getting payday loans," Barrick said.
And Southwest Michigan poverty advocates are worried that CoreScore is going to represent an additional hardship for low-income families already hard-hit by the recession and its aftermath. More employers and insurers are using FICO scores when making decisions about hiring and insuring someone, and advocates are concerned that the new score may have repercussions far beyond a credit card.
"You could be following the rules, could be doing everything you're supposed to, and this kind of scoring could make it even harder," said Jeff Brown, executive director of the Poverty Reduction Initiative in Kalamazoo.
"Increasing number of large employers are using these scores -- not only are you not going to have a good credit score, you're not going to be able to get a job."
'If there's information on you, you should be aware of it'
Both CoreLogic and financial experts agree about one thing: People need to contact CoreLogic now and check their credit report to make sure all the information on it is correct.
"If there's information out there on you, you should be aware of it," said Alyson Austin, corporate communications manager for CoreLogic in Santa Ana, Calif.
Austin said that people have two options regarding the new CoreScore: "They can freeze their file, so it will not be shared," said Austin, in the case of a potential employer, for example. And "if they see an inaccuracy, they can have it reviewed," she said.
But there are instances where the information could be accurate, but the individual may have been acting completely within their rights. Both Brown and Barrick pointed out that, in the case of a repair dispute with a landlord, it is legal in the state of Michigan to withhold all or part of rent.
"In the case of a dispute with a landlord, they could put a note in their file," said Austin.
In the case of employers, an individual has to give permission before a company can check his or her credit report, said Barrick. But employers may be reluctant to hire someone who refuses to let them see their score.
"That's the Catch-22."
However, if an applicant gave an employer permission to pull a traditional credit report but opted out of the Core Score, "I don't think that would hurt them," she said. "I would think there are a lot of people who would like to opt out of a report that they don't know that much about."
Brown is concerned that the individuals and families most likely to be negatively impacted by CoreScore are the ones least likely to be checking their credit report.
"Many people living in poverty struggle getting food on the table tonight. It is unlikely they will be able to advocate for their credit scores, so I would not be surprised to see most folks with some serious problems and issues that they have no idea are affecting them," said Brown. "They will see the consequences and not understand where in the world they are coming from."
While both Brown and Barrick said it's too early to predict exactly what impact CoreScore will have, Brown for one, has concerns.
"If you have made a mistake in the past eight to 10 years or fallen on hard times, your chances of getting credit, correcting an issue or even getting a job may be in jeopardy. It seems to punish people for past behaviors," said Brown, who said he understands that banks need to be prudent when making loans, but is concerned the new score may make it harder for people to recover from a bout with unemployment or other financial hardship. "This will impact those who live day to day more dramatically."
Both Austin and Barrick urged Southwest Michiganders to pull their credit report annually. Barrick said GreenPath offers a free service to go over a person's credit report with them.
"We do find a lot of errors, and we also find things that are valid or fixable," she said, such as medical debt that is billable to insurance companies or old cable boxes that have been returned.
Even the experts can find surprises in a credit report: "I'm a widow, and when my husband died, they listed me as deceased," said Barrick. "It turned my credit score into a zero.