Our world is so automated these days, that no one thinks anymore. If you have a low credit score, you’ll be denied for a $200 per month car lease. But call up Verizon Wireless and you’ll be in a $200 per month calling plan in seconds. How does that make any sense? One can get you to your job, the other can update your status on Facebook (“Hitting the clubs tonight with my boys”).
The credit score (FICO) has gotten out of control. It was meant to assess risk when lending someone money. That’s it. It’s now morphed into assessing risk for renting apartments and getting a job. Two things a lot of people desperately need. The funny thing about FICO is that it failed miserably at what is was born to do.
There are hundreds of thousands of Americans who once had very high credit scores. Then the economy tanked and they lost their jobs. When the bills started piling up, they unfortunately had to default. Their intentions were to pay them in a timely manner, like they always have, (hence the high credit score) but simply couldn’t because they no longer had an income. So didn’t FICO fail at its only job in life? Of course it did. FICO never took into account recessions and depressions and forces beyond the person’s control. It didn’t predict any of that. 820 my ass.
All things the same, there is a big difference between the person who pays their bills on time versus the person who purposefully ignores their obligations. Yet the credit score sees no difference.
So the person who once had a credit score of 820, now has a credit score of let’s say 610. When the person gets another job, their credit score doesn’t go back to normal. They have to climb back up the ladder again. Wouldn’t you think it would jump right back up? The lost job which caused the defaults is now cured in this scenario, so why is the credit score still low? All things as they were then, right? Wrong.
Also, having a low credit score is a never-ending cycle of misery. You need a job, but it’s sometimes difficult with a low credit score. If you get a job you most likely need a car, but it’s definitely difficult because you have a low credit score. Even buying a suit for a job interview to get a job is difficult because you don’t have money to buy the suit because you don’t have a job! And forget about using a credit card to buy that suit, you have bad credit remember? Ahhhhhh!!!!
Here’s another interesting point. Since people with very high credit scores defaulted on their loans etc., the banks still took away what was bought with borrowed money. At that point they don’t treat high credit score people differently than low credit score people. So why not lend money to people with a low credit score? The bank will still treat the loan the same way. They’ll still take back the merchandise.
The FICO score is an arbitrary number. Give people a chance. Reset the credit scores, sit back and watch the economy start to grow again. Or better yet just get rid of the computer generated FICO scores altogether and let actual human beings decide a person’s value. Like in the good ol’ days.