There’s more to it than you thinkJune 30, 2015 9:42
What your bank knows about you
OPINION: Why you should be wary about the data collected by credit rating agencies, and how it affects your ability to get a loan.
March 24, 2010 5:29 by Katherine Azmeh
And so, credit scores could benefit consumers by giving banks more criteria on which to base their lending decisions.
Furthermore, in countries with advanced credit rating systems, borrowers with poor credit scores generally represent a risky proposition for banks, and so often get less favorable terms when obtaining credit. But if you have a good credit rating, you may be rewarded with a better interest rate.
The introduction of credit scoring could, of course, be bad news for consumers. If an individual is unable to meet a payment on a loan – due to illness or redundancy, for example – it can haunt them for years, preventing them from obtaining further credit. Invariably, credit organizations make mistakes, and give individuals negative ratings when not warranted.
More concerning is that credit rankings can sometimes penalize the thrifty. In the UK, for example, many loan providers and credit card companies favor consumers who are MORE indebted, because it means they have more information about them. For example, an individual who keeps up regular payments on two personal loans and two credit cards could be more likely to be granted future loans than someone who has never taken out any credit.
As the credit agencies boost their presence in the Gulf region, consumers should be wary of the information they collect, and how it could affect their creditworthiness.
In other markets, individuals can request copies of their credit scores, so that they can check all the information is accurate. It is essential that this service is offered across the Middle East, to ensure that no one is penalized unfairly.
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