The Credit Scores - Page 2 - Politics Forum.org | PoFo

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Everything from personal credit card debt to government borrowing debt.

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By CatoLives
#13409770
I favour a ban on those free credit score commercials under the 'really fucking annoying' clause. I mean if ever the FDA had a purpose, here it should be. The whole problem here is actually that we have confused the functions of banks. Investment banks should not be the same thing as warehouse banks, and it is fraudulent to mix the two businesses.
By Wolfman
#13409918
^ What does the Food and Drug Administration have to do with anything?
User avatar
By lovertothemoon
#13410465
Everything, apparently :roll:

But of course your credit score determines many things in your life. If you are going to get insurance or borrow money, obviously your back record of your ability to pay should be a significant factor in that. Why is this even a question?
By anticlimacus
#13413243
Nonsense. Your credit score reflects your ability to commit to regular payments over a yearly (or whatever the term is) time period. How else would you gauge the likelihood of a customer to pay their installments on time?


It may very well be an overstatement to suggest that credit reports are completely useless, but the OP is correct in the point that credit scores hold people hostage. They are not as benign as you seem to suggest. Credit scores are a form of surveillance that keep people in check to big business and help to ensure that persons remain economized--i.e. reducible to their economic behavior and compliance with the interests of big capital. More often than serving as a tool to check risk, it is used as a threat to make sure that consumers will continue to act in the "appropriate" way.

For instance, with the housing collapse and the bank bailouts, there is little to no reason why people don't simply walk away from their homes if they are deeply underwater. However, credit scores are used by the banks and government to scare people into making payments into what is for the individuals a giant black whole. Credit scores are a straight jacket--or even a weapon--not a secondary tool amongst others to investigate how people may or may not act economically in the future.
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By The American Lion
#13414317
anticlimacus wrote:It may very well be an overstatement to suggest that credit reports are completely useless, but the OP is correct in the point that credit scores hold people hostage. They are not as benign as you seem to suggest. Credit scores are a form of surveillance that keep people in check to big business and help to ensure that persons remain economized--i.e. reducible to their economic behavior and compliance with the interests of big capital. More often than serving as a tool to check risk, it is used as a threat to make sure that consumers will continue to act in the "appropriate" way.

For instance, with the housing collapse and the bank bailouts, there is little to no reason why people don't simply walk away from their homes if they are deeply underwater. However, credit scores are used by the banks and government to scare people into making payments into what is for the individuals a giant black whole. Credit scores are a straight jacket--or even a weapon--not a secondary tool amongst others to investigate how people may or may not act economically in the future.


If there is a like button on Pofo I would be using it right now. :)
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By Todd D.
#13415127
For instance, with the housing collapse and the bank bailouts, there is little to no reason why people don't simply walk away from their homes if they are deeply underwater. However, credit scores are used by the banks and government to scare people into making payments into what is for the individuals a giant black whole. Credit scores are a straight jacket--or even a weapon--not a secondary tool amongst others to investigate how people may or may not act economically in the future.

Only on PoFo can someone seriously and legitimately suggest that credit scores are bad because they prevent you from defaulting on loans.

Seriously, read what you just wrote again. Someone fronts someone else hundreds of thousands of dollars in order to purchase the home of their choice. That home as an investment doesn't pan out as they were hoping (though it is still presumably entirely habitable and adequate as shelter), and you think that PREVENTING someone from walking away from the obligation to repay the lender...is a bad thing?

More than that, you seriously and legitimately think that some record of someone walking away from that obligation ISN'T relevant should that same person desire to take out ANOTHER loan? You don't think that information is relevant to the second loaner?

Ugh.
By Individual
#13415292
They already regulate credit scores as they own a number of financial institutions and mandated you have a bank card/ debit card that is tied to Visa or Master Card, etc.... I know some bank accounts are not yet tied to these types of cards but that too is soon to change. Then everything you do financially will be tied into your credit score.

Then who wrote the rules that allow the bank to raise your credit card rate for being delinquent on a tax payment? If you are behind or don't pay a property tax the credit agencies pick up on that and the credit card company can and will raise your rate or lower your limit.
I was in the process of contesting a personal property tax and that very thing happened to me, even though the case hadn't been finalized .
By old_school_overlord
#13415390
Your credit score can be relevant to your work, If your working in a bank or as a security guard or police officer etc, there may well be a reasonable justification for your employer confirming that you are not in financial difficulty.

It may also be that the Insurance industry is assessing people with poor credit score ratings as being a higher risk - not for accidents, but for committing fraud. The alternative to allowing these companies to assess & price these risks is probably having them pull out of the market for poor credit individuals, which doesn't help anyone.
By anticlimacus
#13416556
Only on PoFo can someone seriously and legitimately suggest that credit scores are bad because they prevent you from defaulting on loans.

Seriously, read what you just wrote again. Someone fronts someone else hundreds of thousands of dollars in order to purchase the home of their choice. That home as an investment doesn't pan out as they were hoping (though it is still presumably entirely habitable and adequate as shelter), and you think that PREVENTING someone from walking away from the obligation to repay the lender...is a bad thing?

More than that, you seriously and legitimately think that some record of someone walking away from that obligation ISN'T relevant should that same person desire to take out ANOTHER loan? You don't think that information is relevant to the second loaner?


What world do you think we live in Todd? Adam Smith's perfect market? Since you cannot seem to grasp it, I'll tell you, free of charge: We live in a world where the banks and the government created an economic collapse that ruined the economic lives of many working Americans and homeowners--and not just in the US but around the globe. And then these very same banks were bailed out by those same exploited working Americans by force of that same crooked government, no strings attached. Credit scores operate within THIS kind of world: where those in power, both authoritative and economic, are easily able to screw everybody else and then back it up with legal sanctions. And so now, when underwater homeowners are trying to get a breath of air from the sinking water they are in, they are threatened by their credit scores (and moral stigmatization such as what you allude to)--something the banks, the fucking lenders and financiers who create crisis after crisis, never have to worry about.

Finally, I believe I specifically stated that it may very well be an OVERSTATEMENT to suggest that credit scores are completely useless. What I was stressing is how they are more often than not used as weapons than as one tool amongst MANY to estimate how somebody may or may not act economically. Credit scores hold people hostage, and they should have nothing to do with getting a job or insurance, and should not be the deciding factor concerning loans etc. In light of the current crisis, punishing people with low credit scores ratings is kicking people when they are down and just an example of the economic tactics those in power will use in order to keep people in line--even those who have next to nothing. You are an economic number in this society. Nothing more. If you can't fork over dollars to the rich and the government, then you might as well be dead.
User avatar
By Todd D.
#13417168
And so now, when underwater homeowners are trying to get a breath of air from the sinking water they are in, they are threatened by their credit scores (and moral stigmatization such as what you allude to)--something the banks, the fucking lenders and financiers who create crisis after crisis, never have to worry about.

Sorry, does the fact that someone is "underwater" somehow negate the fact that they took out money to pay for a house? Are loan balances based on home values instead of home prices all of the sudden?

Put it this way, let's say I took out $200k to purchase a home. A year later the market flops and my home is only "worth" $150k. Does that change the fact that someone did in fact lend me $200k, not $150k? Does that somehow mean that I am no longer obligated to pay back the full amount that I was loaned in the first place? Of course not. If you were to suggest that this is fair, then the inverse must also be true: If I took out $200k and the value of my home jumps to $250k, would I then owe the bank $250k? Clearly not.

Keep in mind, again, that the habitability of a house has not changed one iota from the lessening of its value. Whether my house is worth $200k or $150k, it's still where I live and is still adequate in that sense. Where people got in trouble is they bought ARM's that they figured they could refinance when the home value appreciated a bit. In other words, they speculated on the idea that their home would be worth more in 3-5 years, and they ended up being wrong. Had they been right, they would have received financial consideration for the risk, so why is it that the financial consequences for the risk are somehow not their obligation?

Credit scores hold people hostage

Nonsense. How are you "held hostage" by your credit score? What can't you do that you think you should otherwise be able to? Walk away from loans that you willingly took out? Overleverage yourself by having a higher debt-to-asset ratio than is sustainable? Credit scores encourage people to act as good credit risks: To pay back the money that they owe, as well as not to overleverage themselves. This is a bad thing?

and they should have nothing to do with getting a job or insurance

I agree that they have precious little to do with getting a job (and again, I have never heard of credit checks being run on potential employees), but to suggest that they have nothing to do with getting insurance is pure ignorance.

and should not be the deciding factor concerning loans

Your ability to pay back a loan absolutely SHOULD be the deciding factor in whether or not someone lends to you, particularly high value loans like a mortgage. It's absolute nonsense to suggest otherwise.
By anticlimacus
#13417251
Sorry, does the fact that someone is "underwater" somehow negate the fact that they took out money to pay for a house? Are loan balances based on home values instead of home prices all of the sudden?


Again, what kind of world do you think we live in? You seem to imagine this idealist fantacy world in which everybody has equal information and bargaining power. The market was artificially inflated by banks and by the government, and the only ones being forced to carry the burden are the poor, working Americans, and homeowners. For some reason you are defending the very banks that caused this mess, suggesting that homeowners, after being completely screwed by them, now morally owe them something and ought to keep paying them even if they are severely underwater. The contract was based on a house of cards built by wall street and now those who own homes suffer the consequences--but not your beloved banks.

Sure a home is a home, in a very superficial sense of the word. But things are not that superficial. First, a home is also equity, and people buy homes--and have been encouraged to do so all century--not only to have a place to live, but because it's a relatively secure investement; for most middle class Americans, their home is their biggest asset, and the biggest determination of their wealth, and its value often effects their economic decisions for the rest of their lives. A home is also one means of economic security for the middle class. Second, you are ignoring a myriad of circumstances, say if somebody loses a job and needs to move, or if somebody has children and outgrows a 1 bedroom condo or 2 bedroom home, or if somebody gets a job transfer, etc. Being "underwater" is not benign. And being 20% to 30% underwater is crippling.

You also forget that most of those suffering right now are not those who took out ARM's. They are average homeowners who put money down at a flat rate. They were not speculators. They wanted to start a life, in what typically would be a good investment. They did not create the shaky world in which the housing market became a precarious bubble that would benefit the super rich at the expense of responsible honest working Americans. Indeed, you are correct, homeowners anticipated that their homes would most likely rise in value as they had for the past 60 plus years. Little did they know Wall Street was creating a huge historical bubble on the backs of American workers that would shake the foundation of the economy and drop hosuing prices by 15% nation wide, on average. Again what kind of world do you think we live in, because I'm a bit baffled as to how benign you seem to describe the circumstances in which people bought homes over the past 6 years. Forgive me, but you sound like the guy who blames the woman for walking into an a dark ally after she gets raped--"she should have known better, she took a risk--got what she deserved!"
Your ability to pay back a loan absolutely SHOULD be the deciding factor in whether or not someone lends to you, particularly high value loans like a mortgage. It's absolute nonsense to suggest otherwise.

Agreed. I just don't think credit scores are necessarily indicative of people's capacity and willinglness to pay their dues. For instance, people who typically have good credit, and try to pay everything on time, now will have terrible credit after the econimc collapse, because of lost jobs, foreclosure, etc. Credit scores ignore all of this. It's just a number that disregards circumstances--human life is not reducible to calculations.
How are you "held hostage" by your credit score?

I mean this metaphorically. The point is that credit scores effect a big part of peoples economic life: their ability to find work, get needed loans, get insurance, etc. Thus the threat of bad credit keeps people in precarious situations. The point is that credit scores are used by those in power to to exploit working Americans and keep them in line. Take, as another example, the credit card industry: they thrive off of those with "bad credit"--in fact they depend on them. They know they will not be able to afford payments, and so they sing their siren songs to these people in vary vulnerable positions, and attempt to capitalize off their economic problems.
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By Todd D.
#13417298
For some reason you are defending the very banks that caused this mess, suggesting that homeowners, after being completely screwed by them, now morally owe them something and ought to keep paying them even if they are severely underwater.

I think that they are responsible for the money that they borrowed that allowed them to purchase the home that they live in. I know, shocking concept.

The contract was based on a house of cards built by wall street and now those who own homes suffer the consequences

Fakse. That contract was based on one very simple concept: We'll give you x amount now to facilitate your purchase, you pay us back x amount plus y interest for that service. Everything else, from the stability of those banks to the subsequent increase / decrease in the value of that home, is entirely irrelevant to that contract.

First, a home is also equity, and people buy homes--and have been encouraged to do so all century--not only to have a place to live, but because it's a relatively secure investement

Which is fine, but with any investment comes risk. Nevertheless, it doesn't negate the fact that despite owing more than your home is supposedly worth, it is still adequate as a residence, meaning that your initial transaction (aka "I'll give you this much to buy this residence") is still valid.

Being "underwater" is not benign. And being 20% to 30% underwater is crippling.

Severe losses on ANY investment can be crippling, just as the gains can be awesome. That's the inherent risk to investment, isn't it?

Indeed, you are correct, homeowners anticipated that their homes would most likely rise in value as they had for the past 60 plus years.

And it turns out that was a faulty assumption. It's unfortunate, but it's part of the risk. It's literally what you earn interest for.

Forgive me, but you sound like the guy who blames the woman for walking into an a dark ally after she gets raped--"she should have known better, she took a risk--got what she deserved!"

I'm not using the term "deserved", because it's irrelevant. Nobody "deserves" what happened. It's simpler than that: Investment carries risk. That's a fact. Certain investments are seen as more stable than others, but as the old saying goes, "Past performance does not guarantee future success". Everyone that bought their home as an investment KNEW, absolutely KNEW that that there was a chance, minute though they may have thought it, that their home would lose value. Did they "deserve" that to happen? In all likelihood not, but that really doesn't matter, and it certainly doesn't make it some sinister conspiracy by big business and big banks to get super rich off the backs of the poor underwater homeowners. Hell, I guarantee you if you asked the heads of the Top 10 financial institutions in this country if they were happy that things went down the way they did, and I guarantee you that all 10 would tell you that they would love to go back to 2006 before this whole thing happened.

Agreed. I just don't think credit scores are necessarily indicative of people's capacity and willinglness to pay their dues. For instance, people who typically have good credit, and try to pay everything on time, now will have terrible credit after the econimc collapse, because of lost jobs, foreclosure, etc.


Take, as another example, the credit card industry: they thrive off of those with "bad credit"--in fact they depend on them. They know they will not be able to afford payments, and so they sing their siren songs to these people in vary vulnerable positions, and attempt to capitalize off their economic problems.

What? Let me get this straight, here's a Credit Card company's plan:
1) Offer credit card to poor credit risks
2) They rack up huge balances that we are more than likely going to have to eat in the end
3) ?
4) Profit.

That makes no sense.
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By ThereBeDragons
#13417321
Defaulting on a home loan during a tremendous housing bubble is really not indicative of ones' ability to pay off ones' credit card, crash a car, or rent an apartment, if all other things are equal; it simply means you got caught up, like the entire rest of America, in a stupid property bubble. Doing so would crush your ratings, but I feel that in the current situation it would be more a punitive* measure than a preventative measure, given the fact that the vast majority of home loan defaults resulted from a particular situation and are extremely unlikely to be seen again in any capacity.

* I am not sure at all whether this is a plausible explanation, but the banks would have an aneurysm if people were able to walk away from sunk houses scot-free; presumably the credit rating companies don't wish this to happen for whatever reason.
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By NYYS
#13417483
Defaulting on a home loan during a tremendous housing bubble is really not indicative of ones' ability to pay off ones' credit card, crash a car, or rent an apartment, if all other things are equal; it simply means you got caught up, like the entire rest of America, in a stupid property bubble.

"Like the rest of America" is a little bit of an exaggeration.

Although I do agree it would make sense for ratings agencies to be a little more lenient, the fact remains that people took risks and ended up with obligations they couldn't/wouldn't meet. There needs to be some kind of measure to indicate that certain people made this mistake and others didn't.
What world do you think we live in Todd? Adam Smith's perfect market? Since you cannot seem to grasp it, I'll tell you, free of charge: We live in a world where the banks and the government created an economic collapse that ruined the economic lives of many working Americans and homeowners--and not just in the US but around the globe. And then these very same banks were bailed out by those same exploited working Americans by force of that same crooked government, no strings attached. Credit scores operate within THIS kind of world: where those in power, both authoritative and economic, are easily able to screw everybody else and then back it up with legal sanctions. And so now, when underwater homeowners are trying to get a breath of air from the sinking water they are in, they are threatened by their credit scores (and moral stigmatization such as what you allude to)--something the banks, the fucking lenders and financiers who create crisis after crisis, never have to worry about.

You are being so dramatic.
By anticlimacus
#13417538
You are being so dramatic.

All I did was describe an actual historical event. But just in case, I'll try to be a bit more dull.
I think that they are responsible for the money that they borrowed that allowed them to purchase the home that they live in. I know, shocking concept.

What you are completely ignoring are the conditions under which these transactions occur--that's what's shocking. You've confused the ideal transaction, for what really goes on in the world.
That contract was based on one very simple concept: We'll give you x amount now to facilitate your purchase, you pay us back x amount plus y interest for that service. Everything else, from the stability of those banks to the subsequent increase / decrease in the value of that home, is entirely irrelevant to that contract.

No, it's not irrelevant--particularly when it is chiefly those banks alone that are privy to that information, and when it is those same financial institutions that are creating artificial increases. The more loans they got--even the riskier loans they got--the more they were able to gamble at the expense of the buyers.
Which is fine, but with any investment comes risk...I'm not using the term "deserved", because it's irrelevant. Nobody "deserves" what happened. It's simpler than that: Investment carries risk. That's a fact.

Again, in Adam Smith's perfect market, what you say makes sense. We do not live in that world. We live in a world were most of the risk lies in the hands of the LEAST ADVANTAGED. The banks had little to no risk--we learned this as a fact after the bubble burst and they were bailed out.
Severe losses on ANY investment can be crippling, just as the gains can be awesome. That's the inherent risk to investment, isn't it?

So you see the point that severe loss of home value is typically crippling and that it doesn't just come down whether or not it is liveable?
What? Let me get this straight, here's a Credit Card company's plan:
1) Offer credit card to poor credit risks
2) They rack up huge balances that we are more than likely going to have to eat in the end
3) ?
4) Profit.
That makes no sense.

They don't eat it. Those people remain in astronomical debt to the credit card industry. In the case in which they finally cannot pay, the credit card companies have already made more than enough off the super high interest rates due to the bad credit. They actively seek out those who have already filed for bankruptcy for that very reason.
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