Why does bad credit = bad person?

[chloe0724]

I don't get why so many things in today's society are based on a person's credit score. Insurance rates, some jobs, security clearance, and I'm sure there's many more.

People have bad things happen to them in their lives and it sometimes affects their credit. I hate the fact that when you are at your worst, and trying to clean up the mess, more things are thrown at you because you now have bad credit.

Just venting...

[Never_Again]

The banks, credit reporting agencies, and Fair Isaac corporation have done a very good job of selling the American public on the value of their credit score. What it really translates into, is an "I love Debt" score. Think about it, if you have no debt, you will not have a FICO score.

As part of that marketing, they want people to know just how "important" that score is. If they can keep everyone thinking that their score is good, therefore they are a good person, then they still have a market for their product, including all of the monitoring services that people will spend upwards of $20.00 per month for, just so that they can know when there score increases or decreases by 5 points.

It has gotten to the point now that people will make absolutely stupid financial decisions to safeguard that FICO score. It is really sad, that someone will debate closing and paying off an account as a good decision because of what it might do to their credit score. Or, people debating taking out a loan and paying interest to "build their credit." Or, people who are blackmailed into paying a bill that they have a dispute with because they don't want it to "mess up their credit."

So of course, to all of those people, if you haven't played the same game, you are a "bad" person.

[HHM]

It has gotten to the point now that people will make absolutely stupid financial decisions to safeguard that FICO score.

I couldn't agree more !!!!

Even on this forum, how many people delayed filing BK for a year-six months etc., liquidated retirement accounts, because of the misguided importance they placed on their credit score.

[banca rotta]

I have mentioned this the other day that the FICO (while I don't agree with this but it is what it is) is only good to land a "dream career". If you have your heart set on a career that requires a high FICO and no bk then you will have to bite the bullet and work 3 jobs to pay down your debt and having the good job with good pay will be better in the long run.

Other then that it's crap!!! The funniest thing here on the forum is watching all the FICO scores and all the pride members take in it.

Nothing in this world except for the career is worth it. If your Insurance company really wants a high score then either get another one or buy a cheap car and pay less that way.

F..K FICO!!

[HHM]

I have mentioned this the other day that the FICO (while I don't agree with this but it is what it is) is only good to land a "dream career"

That is just it, there is no such job that requires a high fico. Now, "some" jobs will review a credit report as part of an overall risk assessment. But I have said this many times before, a person who owes a lot of people money and has accounts in collection is FAR riskier to the employer than someone who filed BK. There is NO job where a BK is an automatic disqualifier...again, that is more hype than truth.

[banca rotta]

That is just it, there is no such job that requires a high fico. Now, "some" jobs will review a credit report as part of an overall risk assessment. But I have said this many times before, a person who owes a lot of people money and has accounts in collection is FAR riskier to the employer than someone who filed BK. There is NO job where a BK is an automatic disqualifier...again, that is more hype than truth.

This why I am here. To learn something new everyday.

[deadbroke99]

[ There is NO job where a BK is an automatic disqualifier...again, that is more hype than truth.[/QUOTE]

I don't know about that. I had a friend who had a bankruptcy on her record from 2 years ago and nothing else bad and was turned down for a job at a bank. She had great references and was currently working at a bank for the past 6 years. When she tried to change banks to be closer to home, she was denied and was told it was due to a bankruptcy on her credit report. The HR person told her once the bankruptcy is over 5 years old to try again. She was mortified.

[CatsInTrouble]

I couldn't agree more !!!!

Even on this forum, how many people delayed filing BK for a year-six months etc., liquidated retirement accounts, because of the misguided importance they placed on their credit score.

Goes along with the BK/stigma post on here right now too. Yes, we killed a large portion of hubby's retirement in an attempt to set things straight and avoid BK.

We also went to a (good, not scammy) debt counselor firm, and although they killed our percentage rates and handled payments for us for MONTHS- we still gave them 2000 a month to give to the CC while our mortgage and car payments suffered.

Stupid. Drowning. All to avoid BK, which, now, I realize is nearly the greatest thing I've ever found out about!

[magyar123]

[ There is NO job where a BK is an automatic disqualifier...again, that is more hype than truth.

I don't know about that. I had a friend who had a bankruptcy on her record from 2 years ago and nothing else bad and was turned down for a job at a bank. She had great references and was currently working at a bank for the past 6 years. When she tried to change banks to be closer to home, she was denied and was told it was due to a bankruptcy on her credit report. The HR person told her once the bankruptcy is over 5 years old to try again. She was mortified.[/QUOTE]

While present/current banks/employers do not spy into their employees' financial affairs by pulling credit reports on an annual basis - new employers/banks will on new applicants. So it doesn't really matter if you've been an exemplary employee at another bank for years/years.

[Flamingo]

[ There is NO job where a BK is an automatic disqualifier...again, that is more hype than truth.

I don't know about that. I had a friend who had a bankruptcy on her record from 2 years ago and nothing else bad and was turned down for a job at a bank. She had great references and was currently working at a bank for the past 6 years. When she tried to change banks to be closer to home, she was denied and was told it was due to a bankruptcy on her credit report. The HR person told her once the bankruptcy is over 5 years old to try again. She was mortified.[/QUOTE]

I actually know of people who were denied employment because of BK on their records and that was with a major financial institution at which I did previous contract work. I was right there when the decision was made as I was involved with their HR Department also. If you have two people with equal skills and experience applying for the job, the one without the bankruptcy will probably get the position. Unfortunately, that is just the way it is in the real world out there.

[Introuble2008]

I HAVE to say something here......the BANKS are turning down employees because they file BK?????!!!!???? They don't have a lotta room to judge, do they?? The banks are the main reason, imho, the nation is in trouble!!!!!! Good grief!

[southernbelle]

I don't get why so many things in today's society are based on a person's credit score. Insurance rates, some jobs, security clearance, and I'm sure there's many more.

People have bad things happen to them in their lives and it sometimes affects their credit. I hate the fact that when you are at your worst, and trying to clean up the mess, more things are thrown at you because you now have bad credit.

Just venting...

I've been waiting for a LONG time for someone to bring this subject up. Good grief, why is our society so fixated on our credit rating???? I could understand it being used as a guide in certain instances, but it seems as if it defines who we are as people and like chloe said, I think we are considered the bottom of the barrel since we've had financial difficulties and were forced to file bankruptcy.

The biggest wakeup call I've ever had when my insurance company increased my home owner's insurance rate significantly due to my filing bankruptcy. Never mind the fact that they had always received their payments on time every month for 11 years. I guess the score tells all.

I've heard that there are alternate ways to getting home loans, etc. without relying on a credit score alone, but good luck finding a lender to go through that process because it would take more time and effort and would utilize some reason and thought. It's too quick and painless to take 20 minutes to pull a quick and dirty credit report and jump to conclusions.

I guess what comes around goes around and those that judge us, are now looking for handouts themselves.

[redwritingmom]

It has gotten to the point now that people will make absolutely stupid financial decisions to safeguard that FICO score.

Seriously. It's a lie we have all bought into because, quite frankly, they have us by the you-know-whats if we don't have that score and need to use credit. Those credit companies are crafty. They sent a message...America responded. I see a similar trap in the always-sound-advice of "max out your 401k." Oops. I guess successful looking people in suits don't always have the "right" answers for us. If we look for security in money, credit, credit score, or things, we set up for disappointment. Money (and credit) is a vehicle not a god.

I will not agree that all credit is bad. Living on cash keeps us on level ground, but, as an entrepreneur by trade, we would not be producing an income without some level of debt to get started. Our current debt brings products to the marketplace, creates jobs, and allows industry that produces a tax base for our community.

Mortgages, when reasonable, can be an example of necessary debt. Few have the resources to purchase a home in cash. But, I think we need to get over the idea that "everyone should own a home." It is not a "right" and it is not the end-all, but it allows us to express our basic instinct to have pride in ownership (although why renters thrash rental properties is beyond me...is there no pride in living in a clean, well-taken care of home?--I digress). If we, as many have been encouraged to do, stretch ourselves thin in order to "get the most house" we can, then, not it is NOT good debt.

The Key is Balance. If you venture into credit again, know WHY.
Avoid credit cards. If you like to swipe, use your Debit card. It is convenient and as good as cash.

In many ways, our economic "crisis" is a positive thing, forcing many, both consumers and lenders, to look at their practices and make adjustments.

[Never_Again]

I see a similar trap in the always-sound-advice of "max out your 401k." Oops. I guess successful looking people in suits don't always have the "right" answers for us.

Investing in retirement is good. The decreases in value of most portfolios over the last few months is a normal cycle, that can and will reverse itself.

If we look for security in money, credit, credit score, or things, we set up for disappointment. Money (and credit) is a vehicle not a god.

Absolutely true!

I will not agree that all credit is bad. Living on cash keeps us on level ground, but, as an entrepreneur by trade, we would not be producing an income without some level of debt to get started. Our current debt brings products to the marketplace, creates jobs, and allows industry that produces a tax base for our community.

This is a common fallacy! The debt is what makes the market spikes upward and downward. This is more conventional wisdom, much like the FICO score, that sounds good, but comes up wrong. There are businesses out there operating debt free, and they are doing much better than the others over the long term.

If one chooses to use debt to fund a business, using the correct amounts of hard capital will do wonders for the security of the business. Over leveraging is a one way ticket to nowhere!

Mortgages, when reasonable, can be an example of necessary debt. Few have the resources to purchase a home in cash. But, I think we need to get over the idea that "everyone should own a home." It is not a "right" and it is not the end-all, but it allows us to express our basic instinct to have pride in ownership (although why renters thrash rental properties is beyond me...is there no pride in living in a clean, well-taken care of home?--I digress). If we, as many have been encouraged to do, stretch ourselves thin in order to "get the most house" we can, then, not it is NOT good debt.

Fifteen year fixed rate with 25% down comes to mind. At that point, you have equity, and are building equity. You are also getting away from a mentality with this type of mortgage that "You will always have a mortgage payment!" (See below)

The Key is Balance. If you venture into credit again, know WHY.
Avoid credit cards. If you like to swipe, use your Debit card. It is convenient and as good as cash.

Also, while we are at it, can we trash the notion that some people mistakenly have that "you will always have a car payment!" Says who???!!!

In many ways, our economic "crisis" is a positive thing, forcing many, both consumers and lenders, to look at their practices and make adjustments.

It is definitely time for a paradigm shift in terms of money, debt, and credit. I am in hopes that it will happen, but, just as I hoped that 9/11 would end political correctness in this country, we have incredibly short memories!

Those who make the shift in their attitudes of credit and money, will see long term prosperity. I am afraid that for many, the shift will end the second that the present "crisis" eases, and that attitude will continue until the next crisis, when they will be running scared again.