Inflated Credit Scores Leave Investors in the Dark on Real Risks

Inflated Credit Scores Leave Investors in the Dark on Real Risks
Visitors walk through the newly opened luxury shopping mall at the Hudson Yards development on the West Side of Midtown Manhattan in New York City on March 18, 2019. Spencer Platt/Getty Images
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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.”