How Technology is Changing the Consumer Credit Landscape

Posted on May 3, 2019 by Nikhil P Naik

A personal credit score is just a number, but it is a factor that can make the difference between you being approved or denied for credit or employment. Your credit score is used by lenders, but also by potential employers. In addition to having a series of credit scores, consumers also have credit files that include a history of all of their outstanding financial accounts. Landlords, auto finance companies, student loans, collections, and credit card issuers report how much you owe, how regularly you make on time payments, and notify credit bureaus if you allow any debts to go into default. Technology has enabled people to be able to find out what is on their credit reports in an instant as well as help consumers to get online decisions. So, whether you are checking your credit file for potential fraud or submitting an application for a student loan consolidation, technology is going to be at play.

Knowing What Your Credit Score Is, Here and Now

It has always been a good idea to check out your credit file prior to applying for any new financial products. First, it is simply good to know that your credit history has been recorded accurately. Second, having the chance to contest erroneous entries and thus get negative remarks removed can get you a better rate on a mortgage, a car loan, or even auto insurance. What consumers need to know is that technology has vastly improved the accuracy of credit reports. Today, you can log onto the website of any credit reporting agency and dispute entries that you believe to be inaccurate for any reason. Before these technological updates, you used to have to depend on a phone system or send snail mail in order to get the ball rolling.

The Basics of Consumer Credit

In a nutshell, a consumer credit file is created once a person starts a relationship with a creditor that reports to the credit bureaus. So, for instance, if you get a credit card and use it responsibly, you will go from having nothing listed on your credit report to having a positive tradeline. Consumers benefit most from having a mix of tradelines that include revolving lines of credit, installment loans and more. Naturally, if you stop paying, your creditors you will see a shift in your credit score. The main advantage that people have today is that they can perform a number of credit related tasks remotely. You can pay most creditors online, request credit line increases via the web, and transfer credit card balances by way of the internet. 

Why Accuracy Is Important When It Comes to Consumer Credit

Consumer credit files are included in massive databases that may be stored on or offline, but the internet is used to keep everything fresh, accurate, and up to date. Credit histories are categorized by name, social security number, and date of birth, but there are also a few other identifiers that are used to help keep every individual’s personal data separate. Although this technology is evolving, errors are still sometimes made. Two individuals with the same name might be confused by a debt collection company, causing an innocent consumer’s credit report to be updated with inaccurate data. A utility company worker may also transpose a single digit in a social security number when reporting a debt to a credit reporting agency. The good news is that technology also allows consumers to be alerted of changes to their credit files in real time, so they can quickly dispute and resolve these types of errors.

The Internet and Your Current Credit Rating

Credit scores can change drastically in the span of less than 30 days. This is because the consumer credit system works largely on a monthly billing cycle. Mortgage, car loan, and credit card payments are generally due on a monthly basis. On this site consumers can compare the best credit cards they can apply for and get an instant online decision. When you make the minimum payment due to your credit card issuer as agreed, you will notice a small boost to your credit score. After several months, your credit score might go up by as much as 50 points just by having a single credit card in good standing. Using the web to keep abreast of your credit score will let you know what has to be done to maximize your credit building efforts.

Using Technology to Find Consumer Credit Products

Members of the military have the option of getting mortgages at phenomenally low interest rates. Likewise, there are credit products that are tailored towards college students, travelers, and frequent shoppers. Those who have long commutes to work might benefit from a gas credit card that comes with extra perks and cashback rewards. The internet is key for matching consumers to the credit products that best fit their needs. The fact of the matter is that there are new credit cards that are announced to the market regularly. Technology keeps consumers informed of what is available and gives them the data that is necessary for making accurate assessments. Rather than guessing on which student loan has the best rates or which mortgage company offers the best incentives to first-time homebuyers you should use the internet to get all of your research done.

Personal credit is one of the most singularly powerful tools that consumers have to improve their lives, build assets, and attain personal wealth. A lot of people have to go through some growing pains in order to learn how to utilize it properly, but once they do there is rarely any going back. With technology, consumers can keep tabs on their credit scores, submit applications for financial products and services, and be kept up to date with credit related activity. All that is required is access to the internet and an account with a credit monitoring service for you to ensure that your consumer credit file is accurately updated. Remember that having a setback with your personal credit is a natural part of life. By using technology, you can recover quickly, get rid of any negative information, and stay on top of your personal credit ratings and history.

About Nikhil P Naik

Nikhil Naik has a Master's Degree in Information Systems, and is currently working as a Software Engineer at Microsoft. He also loves playing cricket, listening to music, and traveling. Twitter Handle - @buzz_nikhil.

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