Poll Finds Direct Payment Improves Credit Scoresmortgagepress.comcredit socres, direct deosit, direct payment, FICO, late payments,
According to a recent national poll by the Direct Deposit and
Direct Payment Coalition, many consumers are unaware that late bill
payments can damage their credit rating. The poll reported that 35
percent state that they had been late with major credit card
payments, 19 percent late on car loan payments, and 17 percent late
with payments to gas station or department store accounts. However,
approximately half of those polled identified a negative impact on
their credit rating when asked to name "any possible consequences
of paying bills late."
"The findings highlight a serious gap in consumer knowledge
about an important aspect of personal finance management," says
Susan L. Robertson, assistant vice president of the Federal Reserve
Bank of Atlanta and spokesperson for the Direct Deposit and Direct
Payment Coalition.
With Direct Payment, consumers authorize a bill to be paid
directly from their account on a designated day each month, so the
payments are made on time.
"Payment history generally carries more weight than any other
element in determining your credit score, which lenders often rely
on when deciding whether to give you a loan or other form of
credit," said Craig Watts, consumer affairs manager at Fair, Isaac
and developer of the mathematical formula used to generate FICO
scores.
Credit scores are a snapshot of a consumer's credit risk profile
and are used by lenders, banks and credit card companies to assess
whether or not a potential customer is reliable with their
payments. Last year, Fair, Isaac revealed the factors that comprise
its credit scoring formula. Approximately 35 percent of the FICO
score is based on a consumer's payment history, including details
on both timely payments and late or missed payments.
For more information, visit www.directpayment.org or
www.directdeposit.org.
