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The Credit Racket

deacphan

deacphan

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Is there anything worse? Every time I'm forced to deal with credit reports or whatever it reminds me of what a racket it is. Working through the mortgage process, I've had to write a letter to explain why I didn't pay my student loans straight out of school when the economy was in the shitter, and I couldn't get a job outside of waiting tables. They wanted me to explain a credit card I'd never had, and try to pay it (all $90 of it). Yet when I called the credit card company they assured me they didn't have any accounts for me (after 30 minutes trying to get a live person). I finally had to conference in the credit report bureau with the credit card company. SO now it is removed, but apparently will have no impact on my credit!?!?!?!

Don't even get me started on what you have to do improve your credit. Paying cash for a car and condo is a bad thing!?!?! not carrying a balance on my credit card is bad!?!?! canceling a credit card after the first free year for a better one is bad!?!?!?! such a racket.
 
What's even crazier is to see how different credit scores are with different bureaus. They can easily vary 50-75 points for the same person.
 
I got the notification from my Barclay Card yesterday that my credit score had changed. I thought it had gone up since I've been paying down debt and my credit utilization was way down, but it had dropped like 20 points.

I was freaking out and ran my 3 credit bureau scores and my credit is exactly the same as it was.
 
For as much as it seems to matter, I hate how it's such a messy and lazily inaccurate process.
 
I've always paid my bills on time so I've never had a problem with my credit score. In other words, meh.

Of course, an identity thief can change that in a hurry *knock on wood*.
 
The point is that paying bills on time is merely one part of the equation and you can be adversely affected by taking action that would ordinarily be considered prudent. Cancel the card you've had for 15 years? You get dinged. Certainly these rules are all weighted differently and yes, if you simply pay your bills on time, you can get a "good" score but something subtle can take you from a "great" score to "good" and a whole different set of credit options. Definitely not meh.

Having said that, it's not all that difficult to find out what the rules are and rig the game in your favor as much as possible.
 
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One of my best friends runs a small motorcycle financing company. He has shown and told me about how arbitrary the numbers can be. He's told about several of them. The one that sticks in my mind was a guy who had a house (never late), had paid off three cars and had a car loan going (all on time). had several credit cards that were all under 50% of limit and was 30 days late on one credit card five years before. He got something like a 630something. A 20-22 yo kid who had a store card and two small Visa/MCs that he was paying well for about eighteen months had well over 700. Both scores came from Experion the same day.

What made this even more bizarre is that my friend says Experion weights installment payments much higher than credit cards to get their scores.

There needs to be a unified metric range for each company with published keys so everyone can see how and why their scores are where they are. There shoudl be huge penalties for the credit bureaus when the fuck up.
 
Pay your bills and you'll have good credit. Don't pay your bills and you'll have bad credit.
 
Dave Ramsey approves.
 
For all of the consumer protection laws we have passed, the credit bureaus are the most harmful to consumers. Its a mess, and its guilty until proven innocent with the burden on the consumer. Pretty much everyone who graduates into adult finance (financing homes and cars, multiple cc's), has an awful story surrounding credit reporting bureaus.

The worst thing is even educated people (arguably like posters here), have very little knowledge about whats good and bad, what to do and not to do, etc.

The best thing you can do is be vigilant, monitor semi regularly (check at least twice a year).

Its painful but if you think you have a big life purchase coming up, like buying a new car, refi or purchasing a new house, its good to check your credit like 6 mos before you start that process, because if you find a problem, its usually not a 30 day fix.
 
if it wasn't such a good predictor of things it wouldnt' be so valuable. agree w/ RJ that the penalties for fuck ups should be much, much higher for the bureaus
 
ImTheCaptain said:
if it wasn't such a good predictor of things it wouldnt' be so valuable. agree w/ RJ that the penalties for fuck ups should be much, much higher for the bureaus
Click to expand...

I think it's value is more that it's the only standardized metric for assessing credit. That doesn't mean it can't be reformed or that it's not a poorly designed metric.

One of those things that is stupid but now so deeply entrenched that everyone uses it with the caveat that we all know it's stupid.
 
On my Barclays card it shows factors affecting the score is that the loan balances are too high in proportion to available loan amounts.

My only loans are two student loans.
 
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