What is a NextGen Score?

The NextGen score is a type of risk scoring model. A risk scoring model uses a complex equation to assess the risk of offering a loan to someone based on that person’s credit history. The number generated by this equation is a person’s credit score. The Fair Isaac Corporation (FICO) originally developed the risk scoring model used by TransUnion, Experian, and Equifax. Though they are not the only company to create such a model, theirs is one of those most used by lenders when evaluating people for loans.

However, in recent years, particularly with the economic recession, there has been a significant increase in subprime lending. Subprime loans are loans usually available to those with credit scores in the range of 500 to 630. Lenders charge more interest for these loans (compared to the interest rates for prime loans). Lenders were particularly eager to offer subprime mortgages. Unfortunately, there have been too many foreclosures associated with the higher number of subprime mortgages.

FICO has therefore created the NextGen risk scoring model. According to Fair Isaac, it was specifically designed to focus on the credit risk of individuals with subprime scores. Its goal is to more accurately predict which people are too risky to offer loans to by looking even more closely at past histories.

So what does this mean for consumers? For those with good credit scores, not much. However for those with bad credit scores, it could either be a positive or a negative. The NextGen score could reveal that someone with a bad credit score has demonstrated a small level of trustworthiness in the past, making it more likely for them to be able to get a loan. For those who had been able to slip under the radar as a subprime customer before now, the increased focus on those with subprime credit scores could make finding a loan much more difficult.

Jessica Malitoris

Jessica Malitoris was born on August 30, 1990 in London, England to Kerry and John Malitoris. Sixth months later, she and her parents moved to Concord, Massachusetts, a town just outside of Boston. Her younger sister, Julia, was born in 1993. In 1998, the family moved to Vienna, Virginia, near Washington, DC, and in 2004 the family moved again, this time to Raleigh, North Carolina.

Jessica attended high school at Ravenscroft School in Raleigh. She participated in swimming, cross country, and track and field. In track, she was Conference champion her junior and senior years in the 100 meter hurdles. In school, her favorite topics were History and English, and in the summer after her junior year, she studied abroad at Cambridge University in England, majoring in European History and English Literature. That summer, she also attended the Tar Heel Girls’ State educational program, and completed the course that enabled her to become a lifeguard.

Throughout high school, Jessica had worked as a swim instructor for the A. E. Finley YMCA in Raleigh, but during her senior year she began to also work as a lifeguard. At the beginning of the year, her article on the development of the Gothic architectural style in France was published in the Concord Review, a national history periodical. In the spring, she made her decision to attend the University of North Carolina at Chapel Hill the following year. Later in the spring, she worked as a research assistant to Professor Michael McElreath of Meredith College. She researched and offered recommendations on potential reading assignments and textbooks for a future course on American Intellectual History.

The summer before beginning college, Jessica worked again as a swim instructor and lifeguard for the YMCA. She began school at UNC Chapel Hill in the fall of 2008. In the spring of 2009, she began work on an article about the changing social and economic roles of women in Mali, a sub-Saharan African nation.The following summer, she completed work on her article while again lifeguarding for the YMCA.

She is now nineteen and a sophomore at UNC Chapel Hill, hoping to major in History with a concentration in non-Western civilizations and a possible minor in Women’s Studies. She enjoys reading, writing, playing the piano, researching, and drawing, and hopes one day to become a professor.

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