Credit risk

Credit risk

 

Tobias Baer takes on the role credit bureaus play and misguided government prescriptions in this post. 

Credit bureaus are both feared and loathed – feared because their revealing of “sins” of the distant past can dash many a dream such as buying a house or a car, renting a flat, or even just getting a postpaid mobile plan, and loathed because their verdict on an applicant sometimes appears unfair or even incomprehensible – e.g., when sensibly taking up an interest-free “Buy Now, Pay Later” offer from the likes of Karna causes the credit score to fall rather precipitously.

On the upside, there is therefore much to be improved (in the US and many other markets) – ranging from the trivial (such as better protection from plainly wrong data and identity theft) to the visionary (such as eliminating racial and gender-based discrimination perpetuated by credit scores). On the downside, the role credit bureaus play with regard to these problems is poorly understood, and hence many prescriptions discussed by politicians and the media are misguided and at times outright dangerous. Beware the unintended consequences! Recent years have seen a lot of innovation and movement in the credit reporting agency industry. Across the globe, credit bureaus have been adding additional, non-traditional data sources and sought to provide scores also for unbanked customers and new applications (such as predicting likelihood of returns for online shoppers). The IPO of Credit Bureau Asia Ltd in Singapore last year (up 46% since) and FinTech start-ups such as Nova Credit and Credit Kudos remind us of the growing potential for profits to be made in the space.

 

Key points include:

  • How to ensure high data quality
  • Reporting positive or only negative data
  • Fighting racial and other discrimination

 

Read the full article, Joe Biden could improve credit bureaus for real – here’s how, on LinkedIn.

 

Umbrex is pleased to welcome Yacine Berdjeghloul with Wolfinance Consulting.  Yacine is a bright Risk professional with a strong academic background and technical experience in modelling & coding. He has a high interest in solving complex issues, is self-motivated and entrepreneurial. He was among the top 5% of his Bachelor’s and in his previous job was presented the GE Award for “Inclusiveness” and “Expertise”. Alongside his technical capability, Yacine is an excellent communicator with a natural ability to establish rapport. Living in the Netherlands, he enjoys nature, movies and spending time with his family. His favourite animal is, you might have guessed, the Wolf. The Wolf is a symbol of guardianship, instinct, loyalty, and spirit.

The Wolf represents strong connection with instincts and intuition, high intelligence and communication – qualities we all should aspire to.