Are credit scores unconstitutional?

[Mama Poot]

Because I think they are. They *lean* towards discriminating against people based on circumstances that are out of their control, in my opinion. Example:You're young, you're a minority, you grew up with diminished opportunities to build credit. Then maybe you do better for yourself, go to school, get a better job, whatever. But this NUMBER is following you around everywhere you go, making it hard if not impossible to do necessary things. All because that NUMBER is "bad" or not high enough, because you had trouble getting started in life, or maybe you got sick and swamped with medical bills you couldn't keep up with.

I really do think credit scores are unconstitutional. And I hope to see the entire credit rating system either done away with or radically changed.

Thoughts?

[expat-mama]

No time to elaborate now, but I totally agree!
I think more attention needs to be put on this issue of injustice and inequality.

[acegmom]

[QUOTE=Mama Poot;12454614] Example:You're young, you're a minority, you grew up with diminished opportunities to build credit. [QUOTE]

Huh? Your credit score doesn't know know whether you are minority. Are you suggesting that minorities be forgiven for bad credit because they didn't have enough opportunities to get themselves into credit trouble? Or that minorities be able to get into more credit trouble and then be forgiven because they "couldn't help it."

Just another way to trap people into pre-conceived stereotypes.

Jill H.

(lucky mom to Amelia 18, Camille 16, Evan 13, and Gracie 11)

[notneb]

I'd agree that it's a broken system, and that a credit score isn't always a good measure of an individuals credit worthiness, but I don't think anyone has a constitutional right to be lent money.

[JamesMama]

I completely agree.

DH has t1 diabetes, we've been swamped with medical bill after medical bill and our credit is TRASHED it's like less than 0 (well not literally but pretty dang close)

[Mama Poot]

[QUOTE=acegmom;12454710][QUOTE=Mama Poot;12454614] Example:You're young, you're a minority, you grew up with diminished opportunities to build credit.

Huh? Your credit score doesn't know know whether you are minority. Are you suggesting that minorities be forgiven for bad credit because they didn't have enough opportunities to get themselves into credit trouble? Or that minorities be able to get into more credit trouble and then be forgiven because they "couldn't help it."

Just another way to trap people into pre-conceived stereotypes.

Jill H.

(lucky mom to Amelia 18, Camille 16, Evan 13, and Gracie 11)

I'm not stereotyping anyone. I'm just stating the truth, and the truth is that minorities in this country, just like everywhere else, have lessened opportunities. And by that, I meant opportunities for getting good education, good jobs, which in turn provide them with the opportunity to buy a house, take out a loan for a car, etc etc...Not opportunities to "get into trouble". Where on earth would you get that idea??? Often times with young people and minorities alike, the problem with credit is not having enough "credit history". My sister recently had this problem and she desperately needed a reliable car for driving to work, so our grandfather took out the loan for her and she makes the payments to him. How is she expected to get ahead if she can't get to work? Paying $1000 cash for a junker that's just gonna break down was not an option for her. See where I'm going with this? Why should she, or anyone else, be discriminated against for "not having enough credit history", which could really be translated into being TOO YOUNG. Isn't discriminating against a person based on age unconstitutional? You see what I'm talking about now??

[D_McG]

I don't think it's discrimination. Lending money is a risk. People have to prove that they are worth the risk. You prove you are worth the risk by demonstrating your ability to pay bills on time.. act responsibly with credit cards, etc (ie - everything that goes in your credit report).

I know it's a PITA. I moved to the US when I was 23 and didn't get a credit card until I was 26 or something. But I worked it out - earned my score and now I'm in good shape.

[Norasmomma]

I think that what bothers me is that much of the credit system is faulted, and if someone steals your identity or somehow something happens that is not your fault you still get screwed. I had a former business partner and I transferred our business phone when I left to be a sahm, somehow the transfer put her info w/my soc # and I never received the last bill because it was hers, but under my soc # and her address. It was the company's F-up, but I got the shaft. My credit score dropped over 100 points because of a $50 phone she ordered that ended up on my #.

It took so much jumping through hoops and time to "fix" what someone else screwed up. That part makes me so mad, it has taken a year to get my score back up. If you dispute anything your treated like a criminal, except here it's guilty until proven innocent. Which I did, but it didn't help my score from 2 months of that sh** being on it, they don't fix that.:

Ok rant over...*deep breath*

[Jemmind]

Originally Posted by notneb

I'd agree that it's a broken system, and that a credit score isn't always a good measure of an individuals credit worthiness, but I don't think anyone has a constitutional right to be lent money.

:

[acegmom]

Ok - now you have changed your

original statement.

Too young for a credit score? Absolutely. Where does being a minority come into play at at all?

Credit is not a "constitutional" right. Equal consideration based on individual qualifications -- as it should be.

Don't link discrimination due to minority status with the "need" for credit for a car for a new graduate. You diminish your own argument, along with any general statement you think you are making.

Jill H.

(lucky mom to Amelia 18, Camille 16, Evan 13, and Gracie 11)

[JTA Mom]

I chose other.

It is discriminatory in the sense of not extending credit to those who 'lack' time or have an 'adequate' yearly income. For example, taking out a loan for $8000 for a car that we put $11k down on was 'too risky' for lenders without that big of a downpayment. We make about 16,000 a year, so half of our income.

Ok, so why is it ok for someone making $60k a year to get a loan for $30k car? Kwim?

Anyways, it's also quite fair though. Dh & I are very good at paying our cc and loans. We have excellent credit. There are people who do not pay back what they charge. I think a lot of the times, bad credit is due to bad decision making. Yes, sometimes it's due to outside circumstances (bad job, medical) but I think a lot of the time people buy things with the card that they wouldn't buy if they had to use cash. No one needs cable, no one needs a flat screen tv, no one needs an expensive shiny new car, etc. But a lot of people who can't afford it on their own use credit cards to get these things, thereby creating problems with paying it back.

Ami

[MamaChel]

Here's my issue: when credit scores are used for non-credit granting purposes.

I don't think that people who have a history of defaults or poor credit should be given credit b/c they want it. (Myself included) So that doesn't bother me.

What bothers me is the fact that I have to submit to several credit checks in order to GET A JOB. We're not talking about a job handling money either-honestly it was easier for me to get a job as a casino dealer, looking at no less than half a million dollars a shift than for me to get other jobs. The reason? Credit rating is used as a gauge of "good moral character" and having a "good moral character" is a prerequsite for jobs in my field. They don't look at the fact that I was a first generation college student, living in poverty, caring for three children, an injured husband, a parent on the transplant list, while leading 2 student organizations, representing my college at several conferences, RUNNING MY OWN PROGRAM and still managing to graduate very close to the top of my class.

What they see is that I have an outstanding CC bill b/c of pay cuts, we can't pay our utilities for the same reason, and we're constantly behind on our car payments. We won't even hit the poverty level for a family of four this year and we are supporting 6. I am trying to better myself but if I can't get a job, what's the point?

That is what bothers me about the current system. I'm not upset about being unable to get a mortgage (much b/c that would be cheaper housing for us), or a better car, or credit to deal with some medical issues-I am not in a position to take on that responsibility right now. I AM upset that I am being "punished" for the crime of poverty, even though I am working very hard to pull myself out of it.

[Contrariety]

Originally Posted by notneb

I'd agree that it's a broken system, and that a credit score isn't always a good measure of an individuals credit worthiness, but I don't think anyone has a constitutional right to be lent money.

Yup.

Though... some employers use it when doing background checks, don't they?

[alegna]

Good points. I have a real problem with credit scores being used for non-credit related things.

(or loosely credit-related things- insurance etc)

-Angela

[ledzepplon]

Originally Posted by D_McG

I don't think it's discrimination. Lending money is a risk. People have to prove that they are worth the risk. You prove you are worth the risk by demonstrating your ability to pay bills on time.. act responsibly with credit cards, etc (ie - everything that goes in your credit report).

:

There is no Constitutional right to borrow money.

[D_McG]

Originally Posted by JTA Mom

It is discriminatory in the sense of not extending credit to those who 'lack' time or have an 'adequate' yearly income. For example, taking out a loan for $8000 for a car that we put $11k down on was 'too risky' for lenders without that big of a downpayment. We make about 16,000 a year, so half of our income.

Ok, so why is it ok for someone making $60k a year to get a loan for $30k car? Kwim?

Because it's likely that someone making $60k a year could afford $6K a year in loan repayments (Assuming a 5 year loan and no interest payments b/c I'm too tired to calculate). And less likely to assume that someone making $16K a year could afford $1,600/year. The first person simply has more disposable income.

I do understand that it could be considered unfair to use credit scores in employment screenings. But at the same time I'm going to guess that there IS a correlation between credit scores and people's ability to commit to a job. Not an air-tight correlation at all. But I bet there is a link. And so I'm not incredibly opposed to using a score as one of MANY tools in screening applicants.

[MamaChel]

I'd like to see the evidence of credit scores and ability to commit to a job. That's not what I have found to be the issue, other people's experiences may differ.

My experience is that it's used more to determine a person's "worth", not their ability to commit or even perform the job duties. I can see using a credit score in a few situations, for example a fiscal officer of a company should be able to manage their own finances and a financial counselor should as well. However, it should not be used to disqualify someone from an entry level job. THAT supports classism and discrimination simply because of the demographic of those who are likely to have low credit scores.

I don't think the system itself is discriminatory, but the way the system is utilized may lend itself to discrimination. The system is just a method of quantifying a person's likelihood of repaying a loan, if I understand correctly-and even then it's not the only indicator b/c a person can have very low income and still have a higher credit score. Like many things, I think that it is beginning to be used for purposes other than what it was intended for and we are starting to see some unintended consequences of that use. It's the useage that bothers me about the system, not its existance.

[D_McG]

Originally Posted by MamaChel

I'd like to see the evidence of credit scores and ability to commit to a job.

I would too to be honest. I'm not sold on the theory and am open to evidence to the contrary.

[ChattyCat]

It's not about committing to a job. It's just simply that those with poor credit scores are more likely to find themselves in financial trouble and more likely to steal from their employers. Employers lose a lot due to employee theft. Someone with good credit and sound financial decision making is less likely to steal. Also, when dh was in the Navy, there were people in his command that would lose their security clearances due to too much debt or bad credit scores. If you're having financial problems, you're more likely to take money from someone else to steal information.

Credit is not a constitutional right. It is a luxury.

[D_McG]

Originally Posted by Mama Poot

Why should she, or anyone else, be discriminated against for "not having enough credit history", which could really be translated into being TOO YOUNG. Isn't discriminating against a person based on age unconstitutional? You see what I'm talking about now??

Because without a proven record of the ability to handle money then a lender is CORRECT to be reluctant to lend to her. I keep coming back to this thread because I feel like I must be missing something. Should a lender just hand money to every young person in the interest of keeping things 'fair'? That's ridiculous.