E-Score vs Credit Score
E-Score vs Credit Score
Most people know what a credit score is, but few know their e-score. An e-score is a type of credit score that is used to evaluate the creditworthiness of an individual or a business. The “e” in e-score stands for “electronic,” and it reflects the fact that these scores are often based on data obtained from electronic sources, such as credit reports, public records, and social media.
E-scores are often used in conjunction with traditional credit scores to provide a more comprehensive assessment of a borrower’s creditworthiness. While traditional credit scores are based primarily on an individual’s credit history, e-scores may take into account other factors, such as employment history, income, and online behavior, to provide a more complete picture of their financial situation.
Lenders and other financial institutions may use e-scores in their underwriting and risk management processes to help them make more informed decisions about lending or extending credit to borrowers.
What Components Make up an E-score That Are Not a Part of Your Credit Score?
The components that make up an e-score may vary depending on the credit scoring model being used but generally include factors beyond the traditional credit score. Some of the components that may be part of an e-score but not a part of your credit score include:
Overall, e-scores can take into account a wider range of factors beyond the traditional credit score, providing lenders and other financial institutions with a more complete picture of an individual’s creditworthiness and financial situation.
Employment history:
E-scores may take into account an individual’s employment history, such as occupation, job history, and income, to assess their financial stability and ability to manage debt.Online behavior:
E-scores may incorporate information about an individual’s online behavior, such as their social media activity, online shopping habits, and internet search history, to assess their creditworthiness.Educational background:
E-scores may take into account an individual’s educational background, such as their level of education and field of study, to assess their potential earning power and financial stability.Personal behavior:
E-scores may incorporate information about an individual’s personal behavior, such as their hobbies, interests, and lifestyle choices, to assess their creditworthiness and risk.Debt:
High levels of debt can make it challenging to save money. When individuals are paying off debt, a significant portion of their income goes towards debt payments, leaving less money available for saving. Although paying off high interest debt should be a priority, you should still aim to have a cash cushion saved for emergencies.
Overall, e-scores can take into account a wider range of factors beyond the traditional credit score, providing lenders and other financial institutions with a more complete picture of an individual’s creditworthiness and financial situation.
What Social Media Can be Used in an E-Score?
Various social media platforms can be used in an e-score to evaluate a borrower’s creditworthiness, but it’s important to note that not all lenders or credit reporting agencies use social media as a factor in their scoring models. Some of the social media platforms that have been used in e-scores include:
LinkedIn
LinkedIn is a professional networking site that can provide information about a borrower’s employment history, education, and professional connections.Facebook
Facebook is the largest social network and can provide a wealth of information about a borrower’s personal life, including their hobbies, interests, and relationships.Twitter
Twitter is a microblogging platform that can provide real-time information about a borrower’s opinions, activities, and interests.Instagram
Instagram is a photo-sharing app that can provide information about a borrower’s lifestyle, interests, and spending habits.
It’s important to note that the use of social media in credit scoring has been a subject of controversy, as it can raise concerns about privacy, fairness, and potential discrimination. As such, not all lenders or credit reporting agencies use social media in their scoring models, and those that do may only use it as one of many factors in determining a borrower’s creditworthiness.
What should an individual know about an e-score and why is it important
There are several vital things that an individual should know about an e-score and why it’s important:
What an e-score is
An individual should understand what an e-score is and how it differs from traditional credit scores. E-scores take into account a wider range of factors, such as online behavior, employment history, and income, in addition to the information in an individual’s credit report.How e-scores are used
An individual should be aware of how lenders and other financial institutions use e-scores and how they may impact their ability to obtain credit or loans. E-scores can be used to assess the risk of lending or extending credit to borrowers and can impact the interest rates and terms of loans.Potential biases and limitations
An individual should be aware of the potential biases and limitations of e-scores, including demographic bias, algorithmic bias, data bias, and privacy bias. They should also be aware of the controversy surrounding the use of e-scores in credit scoring.
Overall, understanding your e-score is important because it can impact an individual’s ability to obtain credit or loans and may be used to make decisions about your financial future.
MoneyWellth and Our Thoughts on E-Scores
It’s important to note that not all lenders or financial institutions use e-scores as part of their credit scoring models, and those that do may use them in different ways. At MoneyWellth, we believe that if information about you is used to determine any component of your financial worthiness, such as your borrowing or creditworthiness, then you should have the ability to request that information and see what was used. To keep fair and equitable access to financial resources, you must also have open access to what information is being used for or against you.
