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Bank algorithms reject debt-free, six-figure earners as US debt hits $1.29T
Fox Business • • business
Key Points:
- Many Americans with six-figure incomes, no debt, and healthy savings are facing unexpected credit denials due to automated underwriting algorithms interpreting limited recent credit activity as risky.
- Approximately 25 million adults have credit files too thin or stale to generate standard scores, making it harder for debt-free consumers to qualify for credit despite responsible financial behavior.
- Experts highlight that credit scores measure profitability for lenders, not personal financial health, and caution that avoiding all credit can create challenges in a digital economy reliant on credit history.
- Financial advisors offer contrasting strategies: some recommend maintaining low balances on credit cards to build credit history, while others advocate for debt avoidance and building cash reserves to achieve wealth.
- The article warns that credit cards can act as a "gateway drug" to other debts and stresses the importance of understanding credit's role as a financial product designed to generate profit for banks.
