Date of Award
5-2006
Document Type
Independent Study
Abstract
Twenty-nine percent of individuals had significant errors in their credit report that translated to a 50 point or more error in their credit score (Electronic Privacy Information Center, 2003). Inaccuracy problems continue to hurt individuals' credit scores so it is vital that credit scores are based on accurate information. When consumers experience problems with their credit history, they become frustrated with the system and lose trust in the results. They want new methods to determine creditworthiness but are resistant to changes. Creditworthiness is important for many people, especially those seeking additional credit offers. Credit is prevalent in everyday life activities. Almost everyone has a checking or savings account and the use of credit cards is increasing each year. These financial instruments and more play a factor in determining an individual's credit score based on the standard credit scoring methods used by the three national credit reporting companies. New methods of calculating creditworthiness are beginning to develop.
One new development is the Tax Return Score, which bases credit risk on an individual's tax return. Selected lines on form 1040 and Schedule A are evaluated using mathematical algorithms. This product not only calculates a credit score, it calculates monthly liquidity, documents excess tax ratios and identifies if the tax return was filed. The history of the credit score will be researched to find if there is potential success for the new product, the Tax Return Score. The financial industry will be evaluated to determine potential customers to market this product. Consumer credit accounts and small business loans are the categories used to find a market for the Tax Return Score. Specific customers will be identified that have the greatest possibility of success. Correlating with this analysis is whether the product can be accepted and what measures need to be taken to gain acceptance.
Recommended Citation
Vorachek, Nicole, "Evaluating creditworthiness based on an individuals tax return" (2006). Theses and Dissertations. 4789.
https://commons.und.edu/theses/4789
