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NextGen is the credit scoring creation of the Fair Isaac Corporation. Fair Isaac made NextGen for the sub prime lending market. It was developed to revolutionize the prior credit models and place more emphasis on credit users whose credit rating is considered poor. This risk scoring model is the most recent and a result of the crumbling credit market that some what helps consumers adjust. In effect what happens is consumer credit scores are more favorable as a whole with NextGen.
One of the primary differences between NextGen and previous models is when it comes to at risk credit users. This will protect the lenders and borrows by having a better predictability model from the get go. It’s important because if a lender uses another credit rating system in today’s market, he or she could be setting themselves up with a high risk borrower thus come up short on the loan. This benefits the borrower by realistic foreseeing whether or not they can pay back borrowed funds and save their credit in the process.
NextGen scores come from the three credit bureau agencies; Equifax, Trans Union and Experian. By using it lenders can also seek out consumers with poor credit if they feel it’s beneficial to them both. It also helps those with bad credit repair it in a shorter period of time than without it. This is especially vital for people in debt consolidation and credit counseling programs. Once a person has better credit they are automatically in the position to receive loans for more money as well as better interest rates. The end result from all of this is more people borrowing money, buying houses and building their credit scores.
In reality what’s taking place is an acknowledgment by the credit industry that many people are in debt and need help with their credit. This NextGen model is basically a way of working with borrowers in a system that will continue to cause debt while at the same time try to make profits anyway. It’s no different than school districts dumbing down test in order for there to be higher test score for the students. Just as in that scenario, NextGen doesn’t address the root of the issue. It only adds a clever mask to it that gives off the allure of improvement. The real issue always has and always be that credit produces debt. There is just no getting around this admission.
Conclusion
Let’s stop blaming the person with bad credit for a system that for nearly a century has been proven not to work. What we need to do is get rid of the credit system altogether and go back to living off of what we have. If we don’t have the means to purchase something right then and there, then we need to save up and purchase it at a later time. NexGen is simply a trick to further take what little is left from people by allowing them away to get deeper in debt.