13 Mar

Credit Scoring – Where are all the Unicorns?

unicorns_blog.jpgRob Stock’s article in Stuff (06/03/2017: http://www.stuff.co.nz/business/money/89758411/Rob-Stock-How-my-credit-score-jumped-200-points-in-a-night) raised some interesting points regarding the impact of Positive data reporting on Credit Scores – in particular the rarity of Credit Unicorns when it comes to credit scoring.

For those who didn’t see the article, it refers to those rare personnel (the Credit Unicorn) who have a credit rating above 900 (out of a 1000.)

Rob ponders the fact that it wasn’t until Positive Credit Reporting was introduced to his credit score, that he was able to achieve this, previously perceived as, mythical status.

Which is my point.

Credit Scores impact everyone’s day to day credit activities. The ability to gain credit for any purpose generally relies on you having a good credit score. But if no-one knows how regularly and promptly you pay your bills, how are you supposed to soar to the lofty heights of a unicorn?

Until 14 years ago, when an innovative credit bureau brought positive data reporting to NZ, the only method of determining your ‘creditability’ was if you had nothing adverse (defaults, judgments, debt collections) registered against you. No cognisance or recognition of your (proud) prompt payment record, which no-one knew about!

So your score started with a moderate rating, had no positive features or profile to add (the secret stuff) and with the limited information available in the marketplace, there was only one direction your credit rating could go from there!

The innovative company I speak of was CreditWorks, who introduced the concept of positive data into NZ in 2003 (the CRISworks database). By initially gathering data (aged trial balance information) from a few willing pioneering clients back then, they started a snowball which gathered rapidly in size, and is now the pre-eminent source of commercial positive data in NZ. From the over $1.7b of current data held in their database, all company credit behaviour can be observed – and scored – and if you are one of the good payers, rest assured you have every chance of achieving “Unicorn” status in the commercial world, and putting your hand up for the best deal.

In an age where credit decisions are sometimes expected in seconds, and where in some parts of the world, your social media actions and activity are the biggest contributing factor to your credit score, it is comforting to know that, in this country at least, credit unicorns have earnt their right to not only exist, but be visible in the credit world via the likes of CRISworks .

Image source: Stuff.co.nz

About the Author

Alan Johnston
Alan heads up the Information bureau side of the business (CRISworks) as well as providing credit expertise and consultancy to clients in the areas of Credit Management best practices, credit training, Credit Terms of Trade reviews, PPSR education, and pretty much all other credit requirements of clients in need.

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