Credit scores are hazardous to your financial health

finance
Created 1/19/2025
Updated 1/19/2025

Credit scores, often seen as a marker of financial health, may actually promote harmful behaviors like excessive borrowing. Sheila Bair argues that scores favour debt accumulation—rewarding multiple loans and credit card use—over financial prudence like saving or paying off balances monthly. While regulators and lenders increasingly consider alternatives, such as cash flow analysis (examining spending and bill payment habits), credit scores still dominate decisions, benefiting lenders more than consumers. Bair calls for reforms to shift focus toward sustainable financial habits and warns young people to avoid falling into the credit score trap.

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