    As the “credit crunch” continues, and lenders re-evaluate just how they will lend money, and to whom… I’ve realized that my mailbox has received a temporary reprieve. In what way? Well those dozens of credit card offers I normally receive have miraculously stopped! We normally get so much junk mail that I haven’t really looked at what was coming in until recently.  The end of the year fills the mailbox with requests for charitable donations and other needs, but as I was looking at my desktop pile of junk, I realized I haven’t seen a new credit card offer in at least 2-3 weeks! Wow!
   I certainly don’t miss the credit card offers… and maybe the lenders are even going to save quite a bit of money from slowing the incessant flow of offers to consumers. I’m sure they’ll resume at some point, but for now it’s nice to have a few less envelopes in the mailbox.  Why have the offers slowed? Can’t be sure, but I suspect it has to do with the lenders re-evaluating business practices, and how they target and evaluate credit risk.  It’s not only the lenders re-evaluating credit risk these days. Fair Isaac Corporation is introducing a new FICO scoring model to more accurately evaluate consumers’ risk profiles. The Wall Street Journal Online published a review of this process in Default Lines: The New Math of Credit Scores.
 “The rollout of the new credit-scoring system comes at a time when lenders say they are eager for more-accurate measures of credit risk, in part because of rising loan defaults as subprime mortgages go bad and housing prices fall. And there are signs that delinquencies are creeping into other types of consumer debt, including auto loans, further prompting lenders to tighten up on credit.”
  I was reading a comment (somewhere?) about financial companies such as Washington Mutual who are struggling with consumer defaults and bad loans, and it was described how their business practices may have attracted greater risk by targeting a greater share of the market through consumers that were not “served” by other institutions… implying that these consumers were a poor credit risk in the first place, and now are defaulting on loans.  Lots of parallels throughout society there, and I suspect credit card offers via mail may generate the same risk if not carefully screened and evaluated.
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It will be interesting to see how the new FICO process really works out for consumers. Of course as the article cites, a new FICO scoring process is not going to change our overall credit history… the “record” of our use of credit. It’s just going to evaluate that history in a new way. And it’s not going to make sure our credit history is accurate either… I don’t like surprises when I decide to apply for a loan, or to find out I’m the victim of identity theft because some schmuck has been using my credit history illegally!   So for peace of mind and financial well-being, I think it’s important that we take responsibility for our own credit history by conducting an annual review.
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