Word: loan
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...Thursday afternoon, Medina and 10 borrowers gather in Ziomara Suarez's apartment in the northern prong of Manhattan. As the borrowers - all women, all immigrants - pack into a room with shelves full of the herbal health remedies Suarez sells, they each hand Medina a small blue ledger with a loan payment tucked inside. If any one of the women doesn't pay her weekly installment, credit will be cut off to the entire group - stunting the small businesses they've each developed. Collateral and credit scores may be missing, but peer pressure is powerful. The result: a 99% repayment rate...
...Fair Isaac and others helped fuel the boom in lending over the past few decades in this country by making it easier and cheaper to determine quickly who would pay back a loan and who wouldn't - or at least so they thought...
...years ago, Fair Isaac produced a chart predicting the odds that a borrower with a certain credit score would default on a mortgage. For example, it predicted that a loan to a borrower with a 680 score had a 1 in 144, or 0.7%, chance of becoming delinquent over the life of the loan; a person with a 700 FICO score would have a 1 in 288 chance, or just...
...Mike Mondelli, president of L2C, which uses historical phone payments and other records to assess an individual's creditworthiness, says his company's business accelerated in May and June of last year as it became obvious that more and more lenders were having loan problems. He says his company has signed on a number of new clients in the past year and that his clients are not using his company's data just to make new loans but also to better assess the risks of the loans they already have made. "Traditional credit scores do a reasonable job of separating...
...Consumer advocates have long complained that credit scores inaccurately measure borrowers' ability to pay back a loan and therefore make it more expensive or even impossible for people who have a low score, or none at all, to borrow. But the complaints about credit scores have fallen mostly on deaf ears in the lending industry. That seems to be changing...