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New credit scoring system to impact borrowing

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Changing credit scoring system

In December, we reported on a move that will soon change credit scoring as we know it. With their partnership with FICO, CoreLogic will fill in the credit holes that traditional scores ignore. The supplemental score will highlight data like evictions, applications for payday loans, child support judgments, property tax liens, the status of homeowner’s association dues, whether or not you are underwater on your house or own other properties that credit agencies miss, and are debating whether or not to include utility bills or cellphone bill payment histories.

To dig deeper on the CoreScore, AGBeat asked CoreLogic four questions to expand on the topic, featured below.

What does the CoreScore include?

What data does CoreLogic have that is not currently part of the new credit scoring but could be in the future (ex: cell phone payment records)?

Currently, the CoreScore™ credit report does not include utilities payment transactions or cell phone payment records. Our focus in our next release is to use the information provided in the CoreScore credit report to calculate credit scores that reflect traditional bureau information as well as this newly available information. In the future, CoreLogic intends to remain focused on collecting credit information that is not readily available on traditional credit reports, to provide increased visibility of consumer credit behavior. We believe that this transparency will lead to reduced delinquency rates for lenders because lenders can make sounder lending decisions and that it will lead to expanded credit offerings for consumers due to greater comfort and lower loss rates of lenders.

Impact on borrowers

How will this positively and negatively impact borrowers?

Just like the factors considered for traditional credit reports and scores, CoreScore will reflect a particular individual’s credit capacity and payment behavior. The score itself will not be available until late March, so it is difficult for us to gauge exactly what kind of an impact it will have before we’ve seen it in the marketplace. However, we can say that for some borrowers it could have a very positive impact, for some it could make no difference in their current ability to qualify for a loan and for others, potentially lower their scores.

“The CoreScore credit report is a valuable tool for consumers and lenders alike,” said Tim Grace, senior vice president of CoreLogic. “By seeing the additional data lenders can now use to make credit decisions, consumers themselves can gain a more clear understanding of their own credit behavior and, as a result, this could help them identify steps they can take towards building a more positive credit profile.”

The CoreScore credit report can be particularly helpful to consumers that have minimal credit transactions on the traditional credit reports. For example, a borrower who has a loan in good standing with a company that doesn’t report to the national credit reporting agencies could be identified as a qualified applicant through the CoreScore credit report, revealing an otherwise unseen credit history.

Consumers will be able to see all of the information CoreLogic provides to lenders and have the right to dispute any data on their consumer file. CoreLogic Credco will facilitate the reinvestigation of each item and perform all Fair Credit Reporting Act (FCRA) responsibilities in the resolution of disputes, correcting the data as needed. In addition, CoreLogic allows consumers to submit a statement of explanation regarding anything on their report, such as a legitimate issue with a landlord’s services.

CoreScore timing

How long has the new credit scoring been in process and what was the inspiration behind this product?

CoreScore has been in development since early 2011. The CoreScore credit report was made available November 30, 2011, while the score itself is in development with our partner, FICO®, and scheduled for release in late March.

Eighteen months ago, when CoreLogic was formed we told the market our new company would leverage our data assets and analytical capability to deliver new products to the market. The CoreScore solution is an example of the company’s vision.

Going mainstream?

What is CoreLogic’s anticipation of the new credit score going mainstream?

While we cannot predict whether CoreScore will become “mainstream,” we can say that this is only the beginning. Our current plan is for the CoreScore solution to supplement existing credit reports and scores. We want to ensure that we’re providing a product that can help consumers gain a better understanding of their finances and help lenders’ better assess an individuals’ credit worthiness. We believe that if lenders are able to make safer lending decisions, it will help unlock additional credit opportunities for consumers.”

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

Business News

Removing remote work options creates a new caste system

(BUSINESS) Remote work has created a democratization of sorts in the workforce, and companies desperate to nix the options could take a hit.

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remote work

Many companies are mandating a return to the office after over a year of allowing employees to work remotely, and, according to a recent study, over half of workers surveyed say they won’t stand for it. As remote work becomes more normalized for all levels of employment, it is crucial that employers retain the option for employees to work in this capacity wherever possible – even if it means employing nontraditional methods.

Harvard Business Review references something called “the democratizing effect of remote work” – the great equalizing that took place during stay-at-home orders nationwide.

In short, this philosophy entails workers having their needs met while continuing to fulfill their contracts of employment. Theoretically, this is a win-win situation.

But employers have their own predilections toward in-house operations, with remote flexibility often being reserved for the highest-ranking officials while “lower” employees are expected to commute. It’s a business model with which we’re exceptionally familiar; why change?

The answer to that question may be employee-driven, as many employees cite a preference for hybrid or remote work environments post-pandemic. “Employees are leaving workplaces that don’t suit their needs anymore,” cites HBR.

Many of those needs are emotional, too. Non-white employees and female employees face a higher level of discrimination in the workplace than their white and/or male counterparts; Black employees, in particular, reported stressful work conditions, with HBR citing that only three percent of Black employees demonstrated an interest in returning to an in-office environment (as opposed to 21 percent of white employees).

Allowing stressed and oppressed employees to work from home can improve their mental health, stress levels, and even their “feelings of belonging at their organization” in the case of Black employees.

Outside of race and gender, the publication also stresses the negative effects that mandating a return after allowing for remote work will have: “Creating a new caste system where elites have anywhere jobs and non-elites are shackled to the office full time is a recipe for high attrition among employees who often have a lot of firm-specific knowledge that is valuable to their employers.”

The less-subtle breakdown is this: If companies that are capable of offering remote work want to retain employees, they need to offer some remote options.

We saw the effects of employees in frontline occupations refusing to show up to work because of poor wages and working conditions earlier this year. It isn’t outside of the realm of feasibility to expect the next major workforce shortage to impact corporations as well.

If the solution is as simple as letting employees work from home a few days per week or permanently (especially if their productivity doesn’t suffer), that’s a pretty small price to pay for continued prosperity.

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Business News

The case for nixing your company happy hour forever

(BUSINESS) Happy hour is designed to bond teams and offer a perk, but the design is outdated to benefit few workers – let’s just get rid of the practice.

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happy hour person drinking

The world of work has forever changed from the pandemic. Melinda Gates hopes that COVID-19 makes society get serious about gender equality. Some people are wondering how many people really want to return to the office at all. There are questions about providing customer service, not to reduce costs to the business, but because shoppers don’t want help in the store.

Let’s tackle another tradition in the office – the happy hour. Wondering if employees really want happy hours? Do they even help?

Why do we even have happy hour?

Happy hour is a tradition that dates back to the early 20th century and the United States Navy. It was originally a weekly entertainment created to alleviate boredom on the U.S.S. Arkansas when sailors were at sea. The practice became popular in the Navy, but over time, the emphasis changed from entertainment to drinking. As drinking became less stigmatized after prohibition, employees began drinking at work and after work. Although happy hours declined in the 1970s and beyond, there was a resurgence in the 2000s.

Why do offices hold happy hour?

Hosting a happy hour is thought to help a team develop positive relationships and encourage employee engagement and productivity. Drink o’clock can be a time of celebration to help employees feel good about the work they’re doing.

Employees can interact with each other outside of the stress of work. It sounds pretty innocent, just getting together at the end of the workday at a local pub or bar, but it comes with a lot of issues.

Is it time to nix the work happy hour?

Happy hour can come with a lot of pressure for employees. Some people believe they have to attend in order to keep moving up in the job, because skipping out can be seen as not being a team player, and many who don’t show up to the “optional” happy hours are also the ones who didn’t get to schmooze with the bosses and thereby are not the ones who get promotions.

This disproportionately hurts women, who typically still have the majority of caregiving tasks in the family and can’t stay out drinking on weeknights.

Transportation issues or flexible schedules don’t lend themselves well to the traditional happy hour after work. And don’t forget the drinking atmosphere doesn’t appeal to everyone. There are many religious, cultural, and personal reasons for people to avoid alcohol, bars, and happy hour functions.

This doesn’t even scratch the surface of liability issues for employers. Can your business risk an accident by an employee who went to happy hour and was a little buzzed when they left?

While we’re rethinking workplace traditions in the post-pandemic era, let’s think about how to get employees engaged. Maybe this outdated practice isn’t the best way to build your team anymore.

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Business News

You absolutely don’t need to be a 100% match for a job to apply

(CAREER) Most people believe they should only apply for their dream job if they’re a perfect match, but studies say that’s the wrong approach.

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apply for a job even if not 100% a match

You don’t need to be a 100 percent match for a job to apply. You just don’t.

We’ve all seen the crazy job postings:

-Must be fluent in Mandarin
-Must be be full-stack coder
-Must also have real estate license
-Must be a rockstar ninja (uuugh)

After seeing endless open positions with specific requirements, it’s no wonder that so many job seekers become discouraged. How can anyone fit 100 percent of the requirements on the job listing? And actually, most people don’t. According to a recent study, you only need to meet ~70 percent of the job requirements to be a good fit for a job.

So you’re telling me a requirement isn’t actually a requirement?!

The study analyzed job postings and resumes for over 6,000 positions across 118 industries, and they found that applicants are just as likely to get an interview whether you meet 50 percent or 90 percent of the requirements.

Crazy, I know. That law of diminishing returns will eff you up.

But what about women? I wondered the same thing. Surprisingly, the interview data was in favor of women that meet less of the requirements. In fact, the study shows that as a female, the likelihood of getting an interview increases if you simply meet 30 percent of the requirements. Also, female applicants are just as likely to get an interview if they meet 40 percent versus 90 percent of the job requirements.

Before you start complaining that women have it better in the job search process, correlation doesn’t equal causation.

Interestingly enough, 64 percent of the female users rejected at least one job where they matched 50 – 60 percent of the requirements, while only 37 percent of male users did. This leads us to believe there more implicit factors to take into consideration, like imposter syndrome throughout the interview process.

If you’re a recruiter or employer, this may seem like more work. But in an increasingly competitive job market for both employers and applicants, this presents an opportunity to get to know people for who they actually are, not just on paper. And resumes often do a poor job of reflecting that — especially the ever-important soft skills.

Key takeaways:

As we’ve gone through this study, here are a few practical action items for job seekers:

1. Apply for a lot of jobs to increase your number of interviews.

The study shows that increased interviews are a direct result of increased applications, not just picking and choosing what you think you’re a good fit for. Which brings us to our next point:

2. Go for those “stretch” roles — you never know what may come of it!

Send in a lot of applications, but don’t let that stop you from approaching the process thoughtfully. Recruiters can tell if you’ve skimped on the cover letter or your resume, and a thoughtful approach to the application process will be noticed and appreciated by recruiters, especially for those reach roles.

3. Don’t second-guess yourself.

We’re always our own worst critics, and according to this, we don’t need to be — especially throughout the job application process. Job hunting is stressful enough, so put on your most upbeat playlist (or Beyonce), say your affirmations, and go on with your bad self and start applying!

This story was first published here in December 2018.

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