Orman calls for changes in credit scoring at Newsmaker
January 13, 2012 | By Heather Forsgren Weaver | HeatherForsgrenWeaver@gmail.com
Personal finance expert Suze Orman is on a mission to make it easier for people who make purchases using cash or debit cards to get a better credit score.
“You have people who are in credit-card debt who pay the minimum payment due at a 29 percent interest rate,” Orman said.
Those people have higher credit scores than people who have no debt, but pay for their purchases using cash or debit cards, she said.
Orman appeared at a National Press Club Newsmaker Jan. 12 with PBS TV host Tavis Smiley and Princeton Professor Cornel West.
The centerpiece of Orman’s crusade is the Suze Orman Approved Card, a prepaid debit card, which she unveiled Jan. 9.
Anonymous spending data from users will be sent to TransUnion to study whether this information can be used by FICO, a public company that uses analytics to score credit for financial institutions, to improve credit scores.
“Do you all get that we are all judged on this little three-digit score known as a FICO score,” Orman said. “FICO scores determine the interest rates you pay on car loans, home mortgages, credit cards. They are also starting to determine if a landlord will rent to you, if an employer will hire you because they look at your credit report as well. It determines what your car insurance premiums are and on and on and on.”
Following their appearance at the Club, Orman, Smiley and West were scheduled to appear on a live panel discussion on eradicating poverty at George Washington University being broadcast by C-Span.
Improving credit scores is a key way to help people out of poverty, Orman said.
The words poverty and poor were not mentioned during the three debates held during the 2008 presidential election campaign, Smiley said.
“We are not going to endure another race for the White House where the issues of the poor in this country go unaddressed,” Smiley said.
Eradicating poverty is a “moral issue about what kind of nation we want to be,” West said.
There is a general misconception about who is poor, Orman said. “The one thing that is fascinating about money is that you can’t look at somebody and know any more are they rich or are they poor.”
Orman no longer sees a middle class, she said. “The middle class has disappeared. There is a highway into poverty. There is not even a sidewalk out.”