Banking

The pandemic-era freeze on student debt payments has "dramatically" improved credit scores for Americans who borrowed money to pay for college, the Federal Reserve Bank of New York said.

Late-payment rates are rising at nonbanks that lend to people with lower credit scores. "We're probably entering a stretch where you're going to see a separation between those that are relatively good underwriters and those that are not," one analyst said.

The agency acknowledged that loan performance in the sector has been strong, but cited several reasons to think that might change, including rising interest rates, the effects of inflation and uncertainty about the future of work and commerce.

Equifax, the second-biggest global credit bureau, was hit with a proposed class-action lawsuit after a report that it provided inaccurate credit scores on millions of U.S. consumers looking for loans.

The founder of the New York City bank and CDFI focused on lending to underserved communities and augmenting digital capabilities.

Equifax said some consumer credit scores were changed because of a computer error that has since been rectified.

Equifax provided inaccurate credit scores on millions of U.S. consumers looking for loans, The Wall Street Journal reported, citing bank executives and people familiar with the matter it didn't identify. 

Even though delinquency rates were previously at extremely low levels, the recent uptick among poorer consumers is worth monitoring, New York Fed researchers said.

The company says it’s making progress on other parts of its business-model revamp — including a shift to lower-cost deposit sources — while regulators weigh its application to buy Flagstar Bancorp in Troy, Michigan.

Silvio Tavares, the credit score company’s relatively new leader, is honing its models to be more inclusive, for instance by taking into account rent payment data and bank account data.