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Inflated Credit Scores Leave Investors in the Dark on Real Risks

  • Same score is a higher risk than a decade ago: Moody’s
  • Goldman sees ‘grade inflation’ contributing to missed payments
Bloomberg business news
How Inflated Credit Scores Are Leaving Investors in the Dark
Updated on

Consumer credit scores have been artificially inflated over the past decade and are masking the real danger the riskiest borrowers pose to hundreds of billions of dollars of debt.

That’s the alarm bell being rung by analysts and economists at both Goldman Sachs Group Inc. and Moody’s Analytics, and supported by Federal Reserve research, who say the steady rise of credit scores as the economy expanded over the past decade has led to “grade inflation.”