4 things that aren’t in your credit score but should be


Yet, if lenders only use your credit report, they do so without having complete information about your financial situation. While credit reports include the status of some lenders’ accounts as well as information on delinquencies and credit inquiries, details of assets, cash flows, and even some debts are missing.

“Less is not more in these circumstances,” says Leslie Tayne, debt attorney, author and founder of Tayne Law Group, PC in New York. Without having a complete picture of a person’s finances, lenders can make decisions that could unfairly limit access to credit or burden borrowers with debts they cannot afford to repay.

Below are four pieces of missing information from your credit report that could paint a clearer picture of your overall financial situation, experts say.

1. Your assets. A credit report includes information not more than 10 years old and only lists business accounts that are registered for reporting to credit bureaus. These include both open and closed accounts as well as information on bankruptcies and defaults. However, bank accounts, retirement funds and other assets are not included.

According to the Consumer Financial Protection Bureau, 45 million people in the United States had little or no credit history in 2015. Some of these people are invisible when it comes to credit, which means they have no credit history. Others have thin files, which means there isn’t enough recent information in their report to provide a credit score. However, including information on consumer assets could allow lenders to understand how these people manage their money as well as the resources they have available to repay debt. Knowing that a person has a large balance in their savings account might make financial institutions feel more confident in extending credit to those with poor credit records or no credit history.

2. Your real estate payments financed by the seller. If you succeed paid off a mortgage, the closed account can remain on your credit report for a decade, which will have a positive impact on your credit score. However, those who finance a home through the seller, rather than with a traditional lender, will not receive this benefit.

“Often times, a land contract or an offer to purchase won’t appear on a credit report,” says Dawn-Marie Joseph, financial planner and president of Estate Planning & Preservation in Williamston, Michigan. Many people bought homes this way after mortgage regulations tightened in the last recession, Joseph says. However, timely payments on these homes go unreported and cannot help build good credit.

The same can be said for other payment plans, such as auto purchases and personal loans between individuals that bypass a traditional lending agency.

3. Your cash flow. Those with a limited credit history might also benefit from a credit report that includes cash flow details. This information would allow lenders to see how money flows in and out of a person’s bank account as well as the balance generally maintained.

“If you look at someone cash flow, you can see if they can afford that $ 500 payment, ”says Nick Thomas, president and co-founder of financial solutions provider Finicity.“ It’s the ultimate indicator of [the] ability to pay, ”he adds.

Finicity is already working with mortgage lenders to provide digital access to cash flow data if the consumer allows it. However, cash flow information has not yet been incorporated into credit reports for use in other lending scenarios. “There is a lot of talk in the industry right now about adding cash flow to decision making [process]”Thomas says, but there is no standard way to do it at the moment.

4. Your complete debt record. In addition to omitting items purchased through seller financing, credit reports do not include other forms of debt, such as medical bills that are delayed less than 180 days and 401 (k) loans. Tayne believes this information should be included, even if it results in restricted access to credit for some consumers.

Without having this information, a lender can extend credit beyond what could reasonably be repaid. “It doesn’t necessarily benefit the consumer,” Tayne says. While denial of credit can cause short-term financial hardship, it can ultimately help people. strengthen their financial situation long-term.

Adding these four categories to credit reports wouldn’t please everyone. “People don’t want [creditors] too much in their business, ”says Tayne. However, including information on assets, cash flow, and all forms of debt will give lenders a more complete view of someone’s financial situation. Then families can access an appropriate amount of credit and avoid situations in which they are doomed to fail by excessive debt.

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