The new system will score you based on your bank account balance, transactions and whether or not you have overdrafts on your account.
Let's talk about all the ways this system is flawed.
Raise your hand if you have had an overdraft on your account in the last three months, whether you have overdraft coverage or not.
Like I said in the article, I have an account with one of the bigger national banks. They cover all my purchases. I have a savings account with them as well, but I don't have the two linked because I don't want them to charge me for using my own money for overdraft protection.
So typically what happens is I get a notification about going into overdraft, and I just transfer the money over from my savings to cover it. As long as I do that before the end of business the next day, i don't get an overdraft fee, but technically, my account was overdrawn
So, if I were to be scored on this new system, that would probably drag my score down. That's not beneficial.
Next, let's talk about who gets shut out of this system. As I mentioned in the article, over 50% of black households in the US are either unbanked or underbanked. Unbanked meaning no bank account. Underbanked meaning they may have a bank account but mostly deal in cash.
Because the new system ranks you on how you use your debit card, even with a bank account, underbanked people would be left in the cold. And those without a bank account at all? They won't even be counted in this new system.
