Believe it or not, money laws go all the way back to Aristotle. The ancient Greek philosopher famously called moneylending “the birth of money from money.”
Even the Bible says “love ye enemies, do good, and lend, hoping for nothing thereby.”
Early in our collective history, moneylending was seen as a personal transaction; an act of charity rather than a transaction with people we would otherwise never meet.
Eventually times changed. In 400 CE, the first mortgage was bought from a monastery. In the 1400’s, lenders didn’t charge interests – instead they took a part of your profits. The Rothschilds changed the game by financing the British war effort in the Napoleanic Wars, and the rest as they say, is history.
However, just as lending changes, so does money. The phrase “data is the new oil” has become practically cliche before we’ve even had time to think about it. Companies like Facebook, who have no products, are worth $200 billion, while United Airlines – who have plenty – are worth $34 billion.
Data. Data allows companies to make decisions that are faster and smarter. The digital universe is expected to grow from 4.4 trillion GB’s in 2013 to 44 trillion GB’s in 2020. Big data vendors, such as Facebook, Google, Equifax, TransUnion, and Experian will see their vendor revenue also grow from $18.3 billion in 2014 to $92.2 billion by 2026.
Knowing who you talk to online, where you log in, the info you submit, and the general writeprint you leave behind has allowed companies to do more than make money. Facebook can use that data to personalize their ads to you, including tailoring movie trailers to your demographic. According to the National Academy of Sciences, social media data can be used to predict the following characteristics: single versus in a relationship with a 67% accuracy rate simply by using your likes. That accuracy rate is higher for whether a person smokes cigarettes, uses drugs, and if your parents were together at age 21. The Financial Times reported that even using the word “wasted” could damage your credit.
As such, big data has affected everything from literature, to restaurants. Did you know that the two teams in the 2017 World Series, LA and Houston, were the baseball teams with the biggest analytics departments? That’s not a coincidence.
Why is this important? It’s important because all of this data is how your credit is determined. Your FICO score is fed information from databrokers, like Equifax, that work in similar ways to social media platforms. FICO merely calculates what the credit bureaus send them. And so if companies like Equifax send them your pay stub information, or your health search queries (which they are on record as doing), all of this data is bundled up into an algorithm (FICO) that determines how much lenders should trust you (FICO currently states that this information is not used) .
That level of trust, in this network of lenders who believe you could be a potential risk – eventually decides where you shop, where you live, where you eat, who you befriend, how you get to work, where your kids go to school, and ultimately, not only whether you can find time to do the things you love, but whether you can make the time to do the things you love.
This trust is determined in a system that is constantly struggling. According to the Federal Reserve, Americans owe over $600 billion in late bills. A large percentage of those late bills fall into the hands of collectors who fabricate these debt inventories. In December of 2016, a Buffalo man was busted by authorities for creating 7.7 million debts that didn’t even exist. Meanwhile, the Society for Human Resource Management says the scale of the Equifax breach – which affected more than half of all Americans – has yet to be truly felt. This struggle within the system explains the struggle of those outside of it, where 6 in 10 Americans will go into debt for a $500 emergency expense.
Learn the rules of the game because no matter how many different players there are, the game is still the same.
For a FREE credit evaluation with expert credit advisors who understand the new money paradigm, call us at 210-520-0444 or visit us at 6989 Alamo Downs Pkwy, San Antonio, TX 78238
