Lenders looking at new credit score for loans during pandemic
The pandemic has banks and other lenders preparing for a wave of bankruptcies, foreclosures and people not being able to pay off their credit cards.
Getting credit or a loan has long depended on your credit score, but lenders are now tightening their credit standards by using something new: resilience scores.
SEE ALSO: Will my credit score be affected during the COVID-19 crisis?
FICO, the company that determines credit scores, has launched the resilience index. The new index ranks your ability to weather periods of economic disruption, like a pandemic, by looking at your long-term spending habits.
Then, it ranks you on a scale of 1-99, and the lower the score the better.
SEE ALSO: Financial tips for an emergency: Guidance to help you through the coronavirus pandemic
Nathan Grant of Credit Card Insider says, "Things that can help give you a better and lower resilience score are longer credit history. You've been a responsible borrower over a long amount of time. You have less frequent credit inquiries, which in time of crisis like this, people want to apply for credit and stuff, but you shouldn't apply for too many hard inquiries in a short amount of time."
Grant says you should also keep your balances lower on your credit cards during these tough times or your resilience score could go up and your credit cards could be canceled or a loan might be more difficult to get.
