54% of people aged 18-34 think the current credit score system is fundamentally flawed, according to new research from MyLifeKit.
In addition, 44% of all other respondents, aged 35 and older, also agreed that credit scores are flawed, contributing to an average of 46% of the total respondents who agree that the current credit score system does not work.
The data, which was based on a poll of 2,000 British consumers, via independent polling agency Censuswide, also conducted analysis into respondents’ justifications for this belief. 39% of people felt that it’s unfair that credit scores condemn them for poor financial decisions made in the past, often up to five years ago.
Furthermore, 38% also believe that credit scores do not accurately represent their lifestyle or livelihood, and 34% stated that it does not provide an accurate overview of a person’s credit worthiness. 36% even cited the fact that you receive a poor credit score if you have limited credit history as a reason the credit score system should be considered flawed.
35% said they regularly check their credit score and work to improve it. This figure increases dramatically between the age group of 25–34-year-olds, with 45% checking it regularly. The most apathetic groups were those between the ages of 18-24 and 45 plus with only 31% each checking their score regularly.
In contrast to individuals checking their score regularly, 32% agreed that they will only check their credit score when they are actually planning to apply for credit, debt or a loan product or similar. When looking at how satisfied individuals are with their own credit score, 27% of all people asked agreed that their credit score was not in a good state.
45% of all individuals feel that decision-making in the financial sectors about consumers lives is too heavily reliant on static numbers, such as credit scores.
Additionally, 25% say that the have been unfairly rejected for a credit debt or loan application in the past. This significantly increases to 34% of 18–24-year-olds and 32% of 25–34-year-olds. Conversely, this drops to 13% of over 55-year-olds believing they have been rejected unfairly.
MyLifeKit is a new company which has launched in the ‘AI for Life’ space.
Romano Toscano, CEO & founder of MyLifeKit, said: “In the age where people and organisations have terabytes of enriched data at their fingertips, is it really fair to judge people’s creditworthiness based purely on one metric pertaining to financial history?
“Credit scores can mean the difference between acceptance or dismissal for things as important as financial services, housing, or even mobile phone contracts, even though it is apparent that a vast fraction of the public have good reason to believe the credit score system is fundamentally flawed.
“Therefore, we must start to see a shift in how financial, healthcare and retail industries deploy enriched data to determine an individuals’ creditworthiness. Said data could include context relating to their lifestyle, health, fitness and the wider environment and economy, all of which are already being tracked and observed by consumers and businesses already.”
