With the benefit of hindsight, it is now commonly known that consumers pose lower future credit risk when they:
- Make all payments on time
- Keep credit card balances low
- Have many years of credit experience
- Open new accounts only occasionally
- Have a good mix of credit experience
Sound familiar? It should, as these results come from many years of research into the predictive value of credit bureau data, and not only remind us that people who demonstrate positive credit management practices at the beginning of any time period are most likely to be demonstrating these same attributes later on, but also that many consumers deviate from their past behavior -- either in good or bad directions -- and that for lenders the ability to identify these consumers is where the money is.
This work is the opinion of the columnist and in no way reflects the opinion of ABC News.