Courier Service Drivers Could Benefit from the New FICO System Credit Scores
A vast number of courier drivers in the US shipping market are independent contractors. Lately, I read an article that Amazon is paying up to $10,000 to their employees willing to quit their jobs and start a small business as an independent contractor courier for Amazon.
Some of the professional courier companies offer vehicles to their drivers for an astronomical lease cost, which creates a significant problem in the driver’s livelihood. No matter what, if you are a courier driver or work for a warehouse logistics company, a reliable vehicle is essential to all of us because we have to get to work.
Independent contractors are sometimes faced with a significant problem when they go to make a large purchase like cars, trucks, or a home. Local dealers check their credit history and may let them know they do not have a good credit history or the financing terms are not favorable. The lower your credit score is, the higher interest rate you’re given, making the loan a high prospect. I am sure that’s not what you want to hear. Here is some homework you can do ahead of time, which may help you receive more favorable financing terms.
Fair Isaac Corporation(FICO) scores are considered the most widely used credit score numbers in lending decisions across consumer loans and lines of credit. The company says its scores are used by 90% of lending decisions, based on data audited by a third party.
FICO is planning on creating a new score, the “UltraFICO”, expecting to be available later in 2019. This consists of information about how you manage your checking, savings, and money market accounts in addition to how you pay back your credit cards and loans.
An “UltraFICO”™ Score can unlock more credit opportunities for millions of hardworking people.
What are the criteria for a good bank account? One of the criteria is to have an average balance of at least $400 and show no negative balances in the previous three months. It also helps to have an account open and active for some time, regularly paying bills such as utilities and rent from these accounts and having more deposits than payouts.
One of the three major credit reporting agencies, Experian offers “Boost Your Score.” Experian Boost is completely free and can increase your credit scores fast by using your positive payment history. It can also help those with poor or limited credit. With this program, you can add your utility bills such as an electric bill, water bill cable/Internet bill, or mobile phone bills. It takes only a few minutes to set up. You can see your score immediately by creating and logging into your account and adding your bank information in the Experian credit database.
Always remember if you are planning for a major purchase do not apply for a local store credit card or major credit card. Every time you apply for such, you will get a hard inquiry on your credit report, which lowers your score by 3-5 points by each inquiry.
Before your next major purchase, we advise our staff, drivers, customers, and friends to make sure you do your homework or speak to your CPA or attorney if you need advice for your particular situation.