To read the full post, please go to: https://www.ocrolus.com/the-insufficiency-of-credit-data-in-a-non-financial-crisis/

Credit scores and the data that underlie them have become a mainstay of American life over the past few decades.  Consumers seeking credit – a credit card, mortgage or auto loan – and businesses seeking capital – a loan, line of credit, equipment lease, receivables advance, or commercial mortgage – have become keenly aware of their scores.  Lenders of all stripes, from the oldest banks to the newest fintech companies, use credit data and scores to make approval decisions, set rates, assign lines of credit, and manage customer exposure.  In most environments, this method works reasonably well. Detailed data on whether someone has paid back prior debt is generally predictive of whether he/she will in the future.  However, as the recent crisis has shown us, there are times when negative external forces are so great that the paradigm shifts completely, where credit data goes from highly valuable to woefully insufficient.