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YOUR AGE AND YOUR CREDIT
How old you are does not influence your credit score
at all. Most people would think the reason is because it
is not legal. However, the reason why your age is not
used in
calculating your credit score is because of legal
safeguarding of the different age classifications as well
as the fear of the possible negative publicity generated
towards the major credit reporting agencies.
How Influential is Your Age in
Deciding Credit Approval
Age is used by creditors when deciding approvals and
rates. Your age will never be the sole reason for being
denied any sort of loan or credit. However, your age is
often considered a strong forecast of what your credit
behavior will be. For example, young people tend to be
less financially responsible than individuals that are
older.
When
applying for car loans, age will not influence
approval as much as bad credit or bankruptcies will. Your
age will greater influence the
auto loan interest rates you receive.
Certain
auto insurance companies will
use age as a major factor in deciding whether or not to
issue a policy. Also, young drivers are likely to receive
much higher premium rates.
Understanding the Legal Safeguarding
of Using Age in Credit Scoring Models
The credit reporting companies will simply ignore
the predictive factors of all age groups. For example,
the elderly tend to be on fixed incomes, making payments
for credit cards and loans an uncertainty. This would seem
to be an important factor when determining the credit
scores of older people. But, it would be illegal to do
so. What do the credit reporting companies do? For the
variable of whether or not timely payments can be made,
the elderly would get the most credit points possible in
relation to their credit history.
Statistically, it does not make sense
to ignore important variables that are associated with
the different age groups. But, the law is the law.
Learn more about
seniors and their credit.
Understand the Possible Negative
Publicity Towards Credit Reporting Agencies for Using Age
in Credit Scoring Models
Consumer advocates, class action lawyers and minority
groups love going after the credit reporting companies.
The major bureaus are hit with many lawsuits every
year. In fact, Fair and Accurate Credit Transactions Act
of 2003 was assertively altered, allowing all people to
obtain a
free credit report copy at least once a
year.
A tremendous backlash would occur, from all different
angles, if the credit reporting companies were to all of
a sudden decide to use age as an influential factor in
credit scoring,
In conclusion...
Your age can influence
whether or not you are approved for loans and what kind
of interest rates you will receive. However, when
determining your credit score, age has no impact good or
bad. However,
major happenings in your life will change your credit,
i.e. having a baby, buying a home, etc..
More editorials regarding credit reports....
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