Question

Credit Pulls Databases

• Should consumers trust / rely on information from a so-called credit pulls database?

• What are the biggest problems with making financial decisions based on anecdotal, crowdsourced info?

• Is it possible for an individual to independently and accurately predict his or her odds of getting approved for a given credit card and receiving a certain spending limit? Is it worth trying?

Answer 1

A)

It is not preferable for consumers to rely on information from the so called credit pulls data base as the veracity of information in these databases is always of doubt because of the crowd sourced nature of intelligence and there being no quality checks on the contribution. Also due to the evolving policy of the central bank and lenders, it is simply not possible for a crowd sourced entity to replicate the sophisticated algorithm of matured lenders and it may so happen that a borrower who have got loan approved earlier may see his or her application for loan getting rejected under a different policy regime.

B)

The biggest problems with making financial decisions based on anecdotal, crowd sourced info are:

• Inaccuracy of conclusions because of compromised inputs.
• Possibility of collective bias in decision making
• Not taking an objective decision based on data & facts.

C)

It is possible to independently and accurately predict his or her odds of getting approved for a given credit card and receiving a certain spending limit by collecting massive amount of data and doing advanced predictive analytics on the data to develop a model for credit scoring. The credit scoring model so developed can help the individual to predict his or her odds of getting approved for a given credit card and receiving a certain spending limit. However this exercise may be prohibitively expensive in terms of time and resources required and hence may not be pursued.