Spotlight on Financial Services

"...a new survey released by the Consumer Federation of America has found that two-thirds of American consumers do not understand their credit scores."


Michael E. Staten		Robert W. Johnson

OCTOBER 2004

Small Business Trends Bode Well for Economy

The August survey of small business owners conducted by the National Federation of Independent Business revealed no sign of weakness in the ongoing economic recovery. The survey was based on 503 respondents in a random sample of NFIB’s 600,000 members. Some highlights of the findings compiled by NFIB Chief Economist William Dunkelberg follow.

Small Business Trends Bode Well for Economy

The August survey of small business owners conducted by the National Federation of Independent Business revealed no sign of weakness in the ongoing economic recovery.... Some highlights of the findings compiled by NFIB Chief Economist William Dunkelberg follow.

Growth Fails to Bring Down Bankruptcies

Personal bankruptcies are stubbornly following a track this year that has kept them about 3 percent below last year's volume. Despite ongoing improvement in employment through 2004, and growth in personal incomes, bankruptcies have not declined as much as lenders had hoped

Auto Loan Delinquencies and Credit Scores

Experian, one of the three large national credit report repositories in the U.S., has developed an interesting website for consumers to learn more about their credit reports and credit scores.... In a recent report, Experian provides some insight regarding the impact of auto loan delinquency on credit scores.

Economic Impact of Population Aging

In remarks before a Federal Reserve Bank of Kansas City symposium on global demographic change, Federal Reserve Chairman Greenspan outlined the economic implications of the relative aging of the U.S. population and the policy considerations generated by such changes.

Global Risk Measure

While lenders in the U.S., Canada, U.K., and South Africa can use Fair Isaac's FICO credit risk score in their credit granting decisions, the lack of credit bureau scores in other countries hampers the ability of businesses to control for risk in their lending decisions. To address this problem, last April, Fair Isaac introduced the Global FICO score.

Credit Reporting Companies Poised
to Improve Consumer Knowledge of Scores

Despite recent efforts by Fair Isaac, Experian and others to broaden awareness of credit scores, a new survey released by the Consumer Federation of America has found that two-thirds of American consumers do not understand their credit scores. This news will likely provide the fuel for numerous business plans to launch new consumer-friendly reporting and monitoring products.

GE Consumer Finance Goes to China

Within the next year, General Electric Consumer Finance will be starting a consumer credit business in China to serve the growing Chinese middle class. According to the American Banker, the company will initially partner with a Chinese bank to offer financing for customers of retailers.

Homeownership Counseling Gets a Boost

A private-sector initiative to boost homeownership counseling was announced in August by the Neighborhood Reinvestment Corporation (NRC). A 2001 Freddie Mac study found that high-quality education and counseling can reduce 90-day delinquencies on home mortgages by up to 34%, but it is been estimated that only 15% of first-time homebuyers receive such training.

New Studies Show Harm
From Anti-Predatory Lending Laws

Evidence continues to mount that some state laws intended to curb abusive mortgage lending are causing significant reductions in the supply of subprime mortgage credit. Two new studies of laws in North Carolina and New Jersey were released in September.

HUD Launches Ad Campaign
to Warn About Predatory Lending

In September the U.S. Department of Housing and Urban Development (HUD) announced the launch of a $3 million nationwide advertising campaign to warn consumers how to avoid becoming victims of abusive lending when purchasing homes.

OCC Advisory Letter Warns Card Issuers

Regulatory scrutiny of credit card marketing and pricing has intensified in recent months. Last month the Office of the Comptroller of the Currency (OCC) issued an advisory letter identifying three practices that it found "unacceptable."

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