There was an article in the newspaper describing how credit-score calculations are being overhauled in a significant way, impacting both those with high and low scores. The most substantial change in how the scores are calculated involves the inclusion of trended data. Instead of just looking at whether a person paid on time or not, the credit bureaus will not assess whether the overall debt is growing or declining. Trended data is intended to give early warning signs to the credit bureau that a consumer may be headed in the wrong direction before they actually start having late payments or debt trouble.
It reminded me of the question a reader asked about addressing the “slow slide” that happens with weight gain. This is how the financial industry is addressing that exact phenomenon. It is not enough to look at one point in time, but it is much more effective and preventative to utilize trended data to give early triggers as to where there is a problem. (As in stepping on the scale weekly or using debt totals to calculate credit scores instead of payment history.)
The slow slide happens not only with weight gain and borrowing limits, but with many other things in life. One dandelion doesn’t mean anything — except that dozens are soon to follow. One unanswered email in your inbox doesn’t cause clutter — but it signals the slide toward overload. One gray hair is not cause for alarm — but unless you color it soon, you whole head will be white. One late arrival by an employee isn’t earth shattering, but is worthy of closely monitoring to prevent a tardiness problem.
A graph usually depicts a gradual curve more frequently than it has sharp peaks and valleys. Your life happens like that, too. Find ways to incorporate trended data in what matters most to you to be able to intervene before the behavior has deviated too far from your desired norm.
Source: Credit-score calculations changing by Ken Sweet for the Associated Press in the Telegraph Herald, April 23, 2017, p. 2D.