Why Insurers and Banks want to know what your job title is
Over the past decade, a person’s credit score has become ever more integral to their financial health. There are a number of factors that influence a credit score but one of the least recognized is a person’s job title. To the average consumer, this may seem like a trivial point but creditors – such as insurers and banks – really want to know. Here is why:
The metrics help to quantify your stated income – Banks take your job title to determine the average income associated with that occupation and then compare it to your stated income on the loan application. If there is a large discrepancy, the bank will likely look to you to validate your claim before approving any loan.
They also establish your baseline risk – Without a doubt, some occupations are worse credit risks than others. According to NSR Invest – a P2P investment manager who tracks these things – doctors are higher credit risk individuals. Studies indicate that even though doctors earn quite a bit more than the “average Joe,” many often forget to make payments on time. Banks love this fact as doctors can well afford to pay the inordinate extra amounts often charged by banks for slightly late payments.
They categorize your dependability –The metrics compiled by banks reveal some interesting statistics about the dependability of people who hold certain job titles. For example, statistics compiled by the Consumer Confederation of America show that engineers and dentists are statistically more likely than lawyers or accountants to repay their loans on time. In a similar vein, a different metric shows that nurses and electricians are a significantly lower default risk than other occupations.
They are used to penalize certain groups – Specifically, salespeople and small business owners are considered higher risks and thus generally pay more for everything from credit card to insurance premiums. Even people with previously good credit are profiled in this way if they leave a “good” job to pursue other opportunities.
Without a doubt the way banks and insurance companies evaluate our credit risk is continuing to evolve. For further information on ways to improve your credit score, please contact us at Boost My Score. We can be found online at BoostMyScore.net or reached directly at 1-888-808-0143.