Creditnet News Story
FICO scores aren't the only sign of a good borrower
Wednesday, June 23, 2010
By Thomas Astery
Consumers are more likely to make on-time payments if they have multiple accounts with the same financial institution.
Loyalty can make a difference when it comes to lenders receiving payments on time, a study by TransUnion found. Whether the loan was for a mortgage or a credit card, consumers who had multiple accounts with the same financial institution were more likely to make payments on time.
Consumers may benefit from being able to show lenders that they are loyal, reliable borrowers.
"Loyalty is built far more effectively in difficult times than in good times. Consumers remember and appreciate those lenders that help them overcome a short-term liquidity crisis, or extend credit when others will not," says director of consulting and strategy for TransUnion Ezra Becker.
The relationship between consumers having multiple accounts and on-time payments held true regardless of credit score, showing that the three-digit number is not the best indicator of loyalty, says TransUnion.
A person's FICO score has long been used to determine a loan's interest rate and more recently, as part of the hiring process by employers. The survey's findings suggest that other factors may influence a person's likelihood of being a good borrower.
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