|Interview: Evan Hendricks
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loans & credit reports
point made in your book is that students and graduates who have student loans
should check their credit reports. Why is this necessary if the student or graduate
is making payments on time?
|Credit scores & credit reports|
should check firstly for the same reason as anyone else, to make sure that their
payments are reported correctly because inaccuracies can creep in anywhere in
this huge, automated system. The second thing is that student loan information
will sometimes multiply like rabbits on the credit report because student loans
are sold from one company to another and the old company continues reporting and
then the new company continues reporting it and it might make it look like you
have more loans than you actually do. Then if they're showing any late payments,
you can get hit with double whammies on late payments as well.
loan information can multiply like rabbits on the credit report.”
they can get those duplicate entries removed?|
When you dispute, they're supposed to investigate -- or, I guess the statutory
term is reinvestigate -- your dispute, and make a decision in 30 days. Either
remove it or modify it or tell you that it's been verified. And so, when the dispute
process works the way it's supposed to, it's a good system. It's just I can see
the cases where it doesn't work the way it's supposed to. Are
credit scores colorblind?
do you stand on the issue of whether credit scoring disadvantages minorities?
gets into a wonderfully philosophical debate about where people stand in society.
I would agree that in one sense that credit scoring is colorblind because it's
based entirely on information in the credit report. That way I would agree with
industry's defense of credit scoring. But on the other hand, different people
from different cultures have different ways of looking at their finances. And,
there's been a low trust of the financial system among significant segments of
the African-American community, the Hispanic community, the Asian community, just
to name a few. And some of the people who are most suspicious in those communities,
and even Caucasians who are suspicious of the way the financial system and consumer
finances work, are actually very responsible with their money. They pay their
rent or their loans, they just don't like having a lot of credit cards or they
don't like having a lot of loans out. But when something happens in their life
and they actually need to buy a home or help a relative buy a home, then they're
going to be at a disadvantage because they don't have a thick enough credit history
to produce a good credit score. And so, the philosophy in my book is that yeah,
there are definitely philosophical reasons to question how powerful the system
has become. But there's no question it's a powerful system, and that you need
to know about it so you can make the right decisions for yourself and your family.