what did people do before their life was based on their FICO score?

Question

why is everything you do based on some rating system created by god knows who! dont you find this kind of sick. please tell me why credit card companys extend credit to people who they know cant afford one. what did you have to do in the old days to get a loan for stuff? why cant we get a job with little or no credit if we are qualified? please answer these with all seriousness.

Answer 1

Well some of your points make sense but overall they make for a better credit system by giving credit to those who are deserving of it, while punishing those who do not manage credit well. It is not a flawless system however. With a disciplined approach you can rebuild your credit within 3 - 5 years. Good luck.

Answer 2

Go to Mexico, or Greece, etc and try to get a loan. Rates are very high, larger down payments and most people do not qualify. You will be glad advanced credit scoring exists. You are confusing topics, credit scoring has GREATLY expanded the use of credit. Now how that process is managed by lenders, regulators, bankruptcy process, etc can be debated. Also keep in mind consumers are DEMANDING credit. Look at the explosive growth of payday advance lenders.
As for employment, the reason an employer would look at a candidates credit report is to get an idea of how they manage their finances. Just like if you owned a trucking company, you would want to review the driving records of applicants.
In the old days, lending was only available for higher income individuals, and you had to have a mulit year relationship with the lender.
Take a look at home ownership rates in the US over the last 30 years. You might be surprised. Also keep in mind that over 50% off all credit card customers do not carry a balance.

Answer 3

I agree with you on some of your points. I work at a bank where people come to me when they need a personal loan or to re-fi their house and it seems like the people that actually NEED the money DONT get approved yet the people that just want to have it to go buy ANOTHER boat or a vacation home get approved.

This is the part you are wrong about though....you said...."please tell me why credit card companys extend credit to people who they know cant afford one?"

How much does a credit card cost you??? NOTHING...they useally have no annual fee or very little. YOU are the one that buys stuff that you cant afford. If you didnt buy anything out of your means then you could afford it. Do you know how many people there are in this country that CANT get a credit card and they ask..." I wish I could get a credit card so I can improve my credit, WHY DONT THEY JUST GIVE ME A CHANCE????"

So like I said, credit card companies dont give credit cards to people they know cant afford one, how are they supposed to know you are going to max it out and not be able to pay on it??? I got a credit card when I was 18 and it is in perfect standing and always has been for 7 years, and you know what it helped me on my credit score a lot.

Answer 4

My life isn't based on whatever this FICO thing is. Every time I get a credit card offer I send them back a little note in their pre-paid envelope kindly telling them to leave me the heck alone.

Who told you that you can't get a job without a credit score? Utter nonsense. Sounds like some BS a credit card company would make up to try and convince you to go into debt.

Answer 5

I think people probably just paid cash for things. If you couldn't afford something you saved your money until you could afford it. They didn't go out and get a mountain ofdebt that is constantly hanging over their head.

As far as not getting a job based on a low FICO, I've never heard of that. It doesn't even sound legal to me. I could be wrong.

Credit card companies extend credit to people who can't afford it because they make a TON of money off those people in high interest rates!!!

Answer 6

FICO scores are based on a statistical model that tells a lender the likelihood of you defaulting on a loan. Because of the high demand for loans lenders need a faster, better way to determine your credit worthiness and FICO is the answer. FICO allows the lenders to structure their loan portfolio in such a way as to maximize profits and limit losses.

As for credit card companies - they are playing a numbers game. They often have their own scoring models that incorporate FICO and because of the high rates and high fees they charge they can afford to take bigger chances.

Answer 7

They did the same thing most wealthy people still do to get and stay wealthy. First, they spend less than they earn and don't use much credit. Second, when they do borrow money, they use lenders that practice "manual underwriting". That is a technical term for actually looking at a persons financial position and making a decision about their credit worthiness.