Latest news with #financialManagement
Yahoo
23-06-2025
- Business
- Yahoo
Buy Now, Pay Later loans will factor in to Americans' credit scores
How well — or how poorly — Americans are managing their Buy Now, Pay Later loans soon could be reflected in their credit scores. FICO plans to launch a suite of credit scores later this year that incorporate BNPL data, providing lenders a window into what's been a big blind spot: consumers' repayment behavior on these increasingly popular installment loans. BNPL loans can serve as an alternative to credit cards and are used by consumers who are seeking more flexible payment options, who want to overcome a tight financial spot, or who are looking to smooth out some bigger transactions to better meet their budgets. For some consumers, the inclusion of BNPL data in the company's FICO Score 10 and FICO Score 10 T models could help serve as a credit-builder — or even a credit buster. 'A lot of BNPL users are often young people who don't have long credit histories,' Ted Rossman, chief credit analyst at Bankrate, told CNN in an interview. 'That's the more optimistic use case, that these people could be brought into the credit system. And if they use Buy Now, Pay Later responsibly, it should help them.' BNPL loans have become more widely available and adoption rates have increased as people of all ages — especially younger adults — have grown more comfortable incorporating them into their shopping habits. However, BNPL comes with such ease that people can quickly spend well beyond their means — especially if they have multiple installment loans running at the same time. A Bankrate survey conducted in May found that nearly half of all BNPL users experienced at least one problem, and overspending topped the list. Consumer advocates and economists alike also have expressed concern about how consumers have used BNPL loans, including a recent uptick in installment financing used for everyday purchases such as groceries. Another question mark with BNPL has been its role in the mushrooming of 'phantom debt.' By and large, the popular installment loan activity is a gigantic black box. The industry remains largely unregulated, and BNPL providers aren't required to report to credit agencies, lenders or other data-keepers. And regulations likely aren't coming any time soon: The Consumer Financial Protection Bureau, under the Trump administration, dropped planned enforcement of a Biden administration rule that would have treated BNPL providers like credit card companies. FICO says its FICO Score 10 BNPL and FICO Score 10 T BNPL — set to launch this fall — would be the first credit scores from a leading scoring company to account for Buy Now, Pay Later activity. Bankrate's Rossman said Monday's 'eye-catching' announcement is a step in the right direction for having a fuller and more accurate representation of consumers' credit activity; however, he noted that the pace of that progress might not be that swift. 'My suspicion is that this may be a slower rollout than one might think at first glance,' he said. That's because credit tracking, scoring and reporting is a complex business. For example, FICO scores are the most widely used by lenders (the company touts that its scores are used in 90% of lending decisions); however, not all lenders use the same scoring model. FICO Score 10 and FICO Score 10 T are among the newest releases, but the most widely used model is FICO Score 8, which was launched in 2009. 'It's kind of like an iPhone, just because they're up to (version) 16 now, some people are still using old ones,' Rossman said. 'Not everybody's using the latest and greatest, just because it's available. Credit scoring has a long sales cycle, lenders are sometimes hesitant to invest in the technology and train all their staff and implement new processes.' The most widely used versions in mortgage lending are FICO Score versions 2, 4 and 5, according to FICO. FICO developed a secret sauce for how factors such as payment history, balances and the like feed into its scoring system; however, those ingredients come from what the lenders report to the credit bureaus. And when it comes to BNPL loans, some of those have only just started hitting credit reports. A select few BNPL lenders, notably industry giant Affirm, have begun reporting activity to agencies such as Experian and TransUnion. 'It's like you've got multiple levels to this,' Rossman said. 'The lenders are the ones furnishing the information, and then they send it to the credit bureaus, and then FICO applies its methodology, and it's kind of hard to get everybody to agree.' Also, BNPL doesn't behave like traditional credit, and that could complicate how these loans are scored, Rossman said. 'Things like frequent opening and closing of accounts, that would be disastrous for your credit score,' he said. 'With Buy Now, Pay Later, you're doing that every few weeks or even every few days. And then credit utilization, too: Maxing out a credit card is bad, but Buy Now, Pay Later is basically you maxing out a short-term credit line and then paying it down.' In Monday's announcement, FICO indicated it developed a 'novel' approach to credit scoring that includes aggregating BNPL data when calculating the variables used in the models. 'Our clients tell us that FICO's initiative to include BNPL data in credit scoring is a progressive step that acknowledges the evolving landscape of consumer financing,' Julie May, vice president and general manager of B2B Scores at FICO, said in a statement. 'By capturing a broader view of consumer credit behavior, lenders believe they can make more informed decisions, ultimately benefiting both the industry and consumers.' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNN
23-06-2025
- Business
- CNN
Buy Now, Pay Later loans will factor in to Americans' credit scores
How well — or how poorly — Americans are managing their Buy Now, Pay Later loans soon could be reflected in their credit scores. FICO plans to launch a suite of credit scores later this year that incorporate BNPL data, providing lenders a window into what's been a big blind spot: consumers' repayment behavior on these increasingly popular installment loans. BNPL loans can serve as an alternative to credit cards and are used by consumers who are seeking more flexible payment options, who want to overcome a tight financial spot, or who are looking to smooth out some bigger transactions to better meet their budgets. For some consumers, the inclusion of BNPL data in the company's FICO Score 10 and FICO Score 10 T models could help serve as a credit-builder — or even a credit buster. 'A lot of BNPL users are often young people who don't have long credit histories,' Ted Rossman, chief credit analyst at Bankrate, told CNN in an interview. 'That's the more optimistic use case, that these people could be brought into the credit system. And if they use Buy Now, Pay Later responsibly, it should help them.' BNPL loans have become more widely available and adoption rates have increased as people of all ages — especially younger adults — have grown more comfortable incorporating them into their shopping habits. However, BNPL comes with such ease that people can quickly spend well beyond their means — especially if they have multiple installment loans running at the same time. A Bankrate survey conducted in May found that nearly half of all BNPL users experienced at least one problem, and overspending topped the list. Consumer advocates and economists alike also have expressed concern about how consumers have used BNPL loans, including a recent uptick in installment financing used for everyday purchases such as groceries. Another question mark with BNPL has been its role in the mushrooming of 'phantom debt.' By and large, the popular installment loan activity is a gigantic black box. The industry remains largely unregulated, and BNPL providers aren't required to report to credit agencies, lenders or other data-keepers. And regulations likely aren't coming any time soon: The Consumer Financial Protection Bureau, under the Trump administration, dropped planned enforcement of a Biden administration rule that would have treated BNPL providers like credit card companies. FICO says its FICO Score 10 BNPL and FICO Score 10 T BNPL — set to launch this fall — would be the first credit scores from a leading scoring company to account for Buy Now, Pay Later activity. Bankrate's Rossman said Monday's 'eye-catching' announcement is a step in the right direction for having a fuller and more accurate representation of consumers' credit activity; however, he noted that the pace of that progress might not be that swift. 'My suspicion is that this may be a slower rollout than one might think at first glance,' he said. That's because credit tracking, scoring and reporting is a complex business. For example, FICO scores are the most widely used by lenders (the company touts that its scores are used in 90% of lending decisions); however, not all lenders use the same scoring model. FICO Score 10 and FICO Score 10 T are among the newest releases, but the most widely used model is FICO Score 8, which was launched in 2009. 'It's kind of like an iPhone, just because they're up to (version) 16 now, some people are still using old ones,' Rossman said. 'Not everybody's using the latest and greatest, just because it's available. Credit scoring has a long sales cycle, lenders are sometimes hesitant to invest in the technology and train all their staff and implement new processes.' The most widely used versions in mortgage lending are FICO Score versions 2, 4 and 5, according to FICO. FICO developed a secret sauce for how factors such as payment history, balances and the like feed into its scoring system; however, those ingredients come from what the lenders report to the credit bureaus. And when it comes to BNPL loans, some of those have only just started hitting credit reports. A select few BNPL lenders, notably industry giant Affirm, have begun reporting activity to agencies such as Experian and TransUnion. 'It's like you've got multiple levels to this,' Rossman said. 'The lenders are the ones furnishing the information, and then they send it to the credit bureaus, and then FICO applies its methodology, and it's kind of hard to get everybody to agree.' Also, BNPL doesn't behave like traditional credit, and that could complicate how these loans are scored, Rossman said. 'Things like frequent opening and closing of accounts, that would be disastrous for your credit score,' he said. 'With Buy Now, Pay Later, you're doing that every few weeks or even every few days. And then credit utilization, too: Maxing out a credit card is bad, but Buy Now, Pay Later is basically you maxing out a short-term credit line and then paying it down.' In Monday's announcement, FICO indicated it developed a 'novel' approach to credit scoring that includes aggregating BNPL data when calculating the variables used in the models. 'Our clients tell us that FICO's initiative to include BNPL data in credit scoring is a progressive step that acknowledges the evolving landscape of consumer financing,' Julie May, vice president and general manager of B2B Scores at FICO, said in a statement. 'By capturing a broader view of consumer credit behavior, lenders believe they can make more informed decisions, ultimately benefiting both the industry and consumers.'
CNN
23-06-2025
- Business
- CNN
Buy Now, Pay Later loans will factor in to Americans' credit scores
How well — or how poorly — Americans are managing their Buy Now, Pay Later loans soon could be reflected in their credit scores. FICO plans to launch a suite of credit scores later this year that incorporate BNPL data, providing lenders a window into what's been a big blind spot: consumers' repayment behavior on these increasingly popular installment loans. BNPL loans can serve as an alternative to credit cards and are used by consumers who are seeking more flexible payment options, who want to overcome a tight financial spot, or who are looking to smooth out some bigger transactions to better meet their budgets. For some consumers, the inclusion of BNPL data in the company's FICO Score 10 and FICO Score 10 T models could help serve as a credit-builder — or even a credit buster. 'A lot of BNPL users are often young people who don't have long credit histories,' Ted Rossman, chief credit analyst at Bankrate, told CNN in an interview. 'That's the more optimistic use case, that these people could be brought into the credit system. And if they use Buy Now, Pay Later responsibly, it should help them.' BNPL loans have become more widely available and adoption rates have increased as people of all ages — especially younger adults — have grown more comfortable incorporating them into their shopping habits. However, BNPL comes with such ease that people can quickly spend well beyond their means — especially if they have multiple installment loans running at the same time. A Bankrate survey conducted in May found that nearly half of all BNPL users experienced at least one problem, and overspending topped the list. Consumer advocates and economists alike also have expressed concern about how consumers have used BNPL loans, including a recent uptick in installment financing used for everyday purchases such as groceries. Another question mark with BNPL has been its role in the mushrooming of 'phantom debt.' By and large, the popular installment loan activity is a gigantic black box. The industry remains largely unregulated, and BNPL providers aren't required to report to credit agencies, lenders or other data-keepers. And regulations likely aren't coming any time soon: The Consumer Financial Protection Bureau, under the Trump administration, dropped planned enforcement of a Biden administration rule that would have treated BNPL providers like credit card companies. FICO says its FICO Score 10 BNPL and FICO Score 10 T BNPL — set to launch this fall — would be the first credit scores from a leading scoring company to account for Buy Now, Pay Later activity. Bankrate's Rossman said Monday's 'eye-catching' announcement is a step in the right direction for having a fuller and more accurate representation of consumers' credit activity; however, he noted that the pace of that progress might not be that swift. 'My suspicion is that this may be a slower rollout than one might think at first glance,' he said. That's because credit tracking, scoring and reporting is a complex business. For example, FICO scores are the most widely used by lenders (the company touts that its scores are used in 90% of lending decisions); however, not all lenders use the same scoring model. FICO Score 10 and FICO Score 10 T are among the newest releases, but the most widely used model is FICO Score 8, which was launched in 2009. 'It's kind of like an iPhone, just because they're up to (version) 16 now, some people are still using old ones,' Rossman said. 'Not everybody's using the latest and greatest, just because it's available. Credit scoring has a long sales cycle, lenders are sometimes hesitant to invest in the technology and train all their staff and implement new processes.' The most widely used versions in mortgage lending are FICO Score versions 2, 4 and 5, according to FICO. FICO developed a secret sauce for how factors such as payment history, balances and the like feed into its scoring system; however, those ingredients come from what the lenders report to the credit bureaus. And when it comes to BNPL loans, some of those have only just started hitting credit reports. A select few BNPL lenders, notably industry giant Affirm, have begun reporting activity to agencies such as Experian and TransUnion. 'It's like you've got multiple levels to this,' Rossman said. 'The lenders are the ones furnishing the information, and then they send it to the credit bureaus, and then FICO applies its methodology, and it's kind of hard to get everybody to agree.' Also, BNPL doesn't behave like traditional credit, and that could complicate how these loans are scored, Rossman said. 'Things like frequent opening and closing of accounts, that would be disastrous for your credit score,' he said. 'With Buy Now, Pay Later, you're doing that every few weeks or even every few days. And then credit utilization, too: Maxing out a credit card is bad, but Buy Now, Pay Later is basically you maxing out a short-term credit line and then paying it down.' In Monday's announcement, FICO indicated it developed a 'novel' approach to credit scoring that includes aggregating BNPL data when calculating the variables used in the models. 'Our clients tell us that FICO's initiative to include BNPL data in credit scoring is a progressive step that acknowledges the evolving landscape of consumer financing,' Julie May, vice president and general manager of B2B Scores at FICO, said in a statement. 'By capturing a broader view of consumer credit behavior, lenders believe they can make more informed decisions, ultimately benefiting both the industry and consumers.'
Entrepreneur
07-06-2025
- Business
- Entrepreneur
Enjoy a Lifetime of Intuit QuickBooks Desktop Pro Plus for Just $250
Keep track of all your company's finances in one place with expense tracking, invoicing, bookkeeping and more, all in one user-friendly program. Disclosure: Our goal is to feature products and services that we think you'll find interesting and useful. If you purchase them, Entrepreneur may get a small share of the revenue from the sale from our commerce partners. Many small businesses have only one owner and no employees, which means they have to handle crucial accounting tasks on their own. Fortunately, Intuit QuickBooks® Desktop Pro Plus 2024 offers everything a business owner needs to manage company finances all in one program. Best of all, a lifetime license is on sale for just $249.99, a 64% discount off the regular $699 retail price. This powerful software was designed specifically to offer a full suite of features that help freelancers, small business owners and more perform financial management tasks accurately and efficiently. That includes processing purchase and sales orders, job costing, time tracking and so much more. This QuickBooks® version makes it so much easier to manage inventory, vendors and customers. You won't have to deal with the headaches of tracking the value and depreciation of fixed assets anymore, either. Not only will generating professional reports be a breeze, but the reports will be infinitely more useful. QuickBooks® Desktop Pro Plus 2024's reporting tools bring insights to the reports that help you make more informed financial decisions, which can be enormously useful in achieving your goals. Importing data from Excel or older QuickBooks® versions is seamless. This program integrates with TurboTax, QuickBooks® Online, other Intuit® tools and financial institutions. The enhanced bank feeds make reconciliation a snap. You'll also get all the latest features and updates, as well as support for multiple languages. Now you can save time, stay organized and confidently manage your company finances forever. This is a one-time purchase for a single Windows lifetime license with no hidden costs, so you won't have to worry about expensive subscription fees. Installation is effortless with step-by-step guidance for an easy, quick setup. Get your lifetime license for Intuit QuickBooks® Desktop Pro Plus 2024 today while it's available for only $249.99, a discount of 64% off the regular $699 retail price. StackSocial prices subject to change.
Mail & Guardian
28-05-2025
- Business
- Mail & Guardian
Auditor-general exposes municipal meltdown
Auditor general Tsakani Maluleke This is despite an uptick in the number of clean audit reports for the 2023-24 financial year. Maluleke painted a dire picture of the widespread poor quality of financial reporting and mismanagement in a briefing to parliament's cooperative governance portfolio committee on local government audit outcomes for the financial year. 'The good news is that we are back to 41 clean audits [out of 275 municipalities], which is where we started back in 2021. So we're no more at the 34 that I talked about last year. However, that makes up 15% of the municipalities across the country,' she said. 'It's great that we are reversing this trend around disclaimers of audit opinion. However, the state of financial and performance management disciplines in local government still leaves much to be desired, and so the story, in many ways, is similar to what I would have shared before. I worry … that I will sound like a stuck record.' Her office's assessment underscored a profound crisis in municipal governance that extends far beyond mere administrative inefficiency. She said 14 municipalities received Ninety-nine municipalities had unqualified opinions and 41 municipalities achieved clean audits. Maluleke said the metropolitan landscape was particularly alarming. 'The eight metros across the country look after half of the expenditure budget for local government. They look after service delivery that affects 46% of households across the country. Their budgets are quite significant,' she said. 'They sit in the centres of economic activity, and so, given the scale of their operations, the complexity thereof, but also the resources that they manage and even their location, they should have no difficulty attracting the skills that they need to run their environment. 'Unfortunately, out of the eight, we've got only one clean audit, which is the City of Cape Town. It was the only clean audit last year as well.' Maluleke's office was also concerned about the quality of financial statements of the big metros and municipalities, noting that when the audit started only 63 out of 275 municipalities provided quality financial statements. 'By the time we finished, we managed to get 140 credible financial statements through corrections during the audit process,' she said. 'The City of Joburg didn't give us quality financial statements when we began our audit. Now that's a big city, the biggest in the country, the biggest on the continent. There should be no difficulty in ensuring that you've got the skills and the capability to do what you're supposed to do, just on compiling financial statements.' The audit exposed shocking institutional decay across infrastructure projects. 'We selected projects mostly in the metros and in those that have disclaimers of audit opinion. We found that the majority of projects had problems — 77% of the projects we visited had problems. Either they were delayed, there was poor quality work and then we also identified matters around the inadequate maintenance of infrastructure,' she said. 'The reason this exists, in our view, is that even if performance agreements are done as a tick-box exercise, they are not monitored. Contractors are appointed poorly through a procurement process that is not in compliance with the law and one that does not lead to the best decision. So the contractor that's appointed is one that's not equal to the task, then they are not managed — contract management capability is not there. 'The municipality doesn't have employees within it that have a set of standard operating procedures, a set of disciplines and even a set of skills to monitor the performance of these contractors, and we're seeing even once they've seen problems with the performance of the contractor, they don't hold them accountable. 'Other than the municipalities that have got clean audits, you've got the majority of municipalities with material compliance findings, mostly in the area of procurement and contract management. In a nutshell, it tells us that we do not yet have a culture, a state of control, procedures and even accounting mechanisms. 'Metros are not any better. And given their significant budgets, one would have thought that this area of procurement would enjoy tremendous attention by the people that hold the purse.' Buffalo City's engineering crisis epitomised municipal dysfunction, the auditor general said, telling MPs: 'They have had a vacancy for district engineer responsible for electricity for 80 months — that's six years and eight months.' An identical vacancy for sanitation engineering had remained unfilled for 24 months. Maluleke said the financial mismanagement is systemic and deeply entrenched. 'This year 219 municipalities spent together R1.47 billion on consultants purely for the purpose of helping them compile financial statements. Last year we reported R1.37 billion so the number is not really changing. 'This is when there are CFOs [chief financial officers] in place and there are finance functions that are populated with people that have been appointed. We also note that municipalities that get disclaimers of opinion also still spend on consultants on average R6 million. 'Municipalities with adverse findings also spend on consultants. The ones with qualified audits also spend on consultants. It tells us then that the key question is: why is it that even when there's consultants being appointed, we still get bad quality submissions?' She said her office had been asking this question for the past 10 years. 'The answer is that in most instances, the work of the consultant is not being reviewed. They say, well, there's 2% [of cases] where the consultants didn't deliver. But much of the problem is either consultants are appointed late, the underlying documents are not available or that their work is not being managed properly by the people that appointed them,' she said. 'What it tells you is that you've got CFOs and finance staff in place. They appoint consultants every year, and then once the consultant is there, they basically leave their desks. And so the consultant must engage with the auditors, which, in our view, tells a story about the culture and discipline more than even skills.' 'There is an element where the people under the CFO, there are some who are appointed and don't have the skill to do the basics. However, much of the problem, we believe in local government, especially in this area of overusing consultants, relates to discipline.' Municipal debt continues to spiral out of control as many municipalities approve unfunded budgets. 'We see unauthorised expenditure, meaning that where you've got expenditure levels approved, people are spending beyond that … And of course, that then compromises the financial health of those municipalities. Many ended up with a deficit situation, and many have got major creditors that they don't pay, such as She said suppliers and creditors to municipalities were waiting 286 days on average to receive money due to them, because cash flow had become very tight across many municipalities. Many of the suppliers then charged interest and penalties, much of which ended up as fruitless and wasteful expenditure. The treasury's Eskom debt relief programme aimed at helping municipalities enter into a settlement arrangement with the power utility had failed. 'It's not working — 84% of the municipalities that participate in that programme are not complying with the conditions that they subscribed to. Again, in many instances, that's a discipline issue,' Maluleke told members of parliament. The auditor general's report noted that cooperative governance and traditional affairs (Cogta) MECs, the minister and provincial legislatures were not doing their jobs in overseeing municipalities. 'The Municipal Systems Act provides that the MEC of Cogta must compile a report that analyses the performance of each municipality and that report must include remedial action that the MEC or municipality is undertaking and provide a report to provincial legislature every year on how municipality is responding,' Maluleke said. 'We have found those reports are either not done or if they are done they are done late; they are also either not tabled in the legislature and if tabled they are not dealt with in the legislature. 'We believe wholeheartedly that if MEC did their part they would not be lurching from crisis to crisis and if the legislature played their part they wouldn't be waiting for the AG to say there is a disclaimer here, they would be monitoring these movements as a matter of course.' She said the minister of cooperative governance and traditional affairs's compilation report was often not done or done late. 'We have to get every single player in the ecosystem of accountability doing their part otherwise we will not arrest the decline of local government,' Maluleke said.
