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Is the system of credit ratings fair?
Results so far:
| Yes | 34% | 199 votes | Total: 588 votes | |
| No | 66% | 389 votes |
Yes
by Marco Angioni II
Created on: January 13, 2008
The main reason that the credit rating system is fair is because each person controls his/her own credit rating. Your borrowing and payment habits are what dictate your credit rating. If you abuse your credit, your credit rating reflects the same. However, if you are a responsible credit user, your credit rating will be favorable.
Lenders need a system that can help them determine whether a person is a borrowing risk. By using the current credit rating system, lenders have some kind of barometer for measuring credit risk. Without such a system, obtaining a loan would be extremely difficult because lenders would require, among other things, years of financial records to help determine the potential borrower's creditworthiness. Our current credit rating system conveniently compiles all of a person's financial records and uses them to create a nice, neat number that lenders use to make lending decisions.
The people that complain most about our credit rating system are the people that have low credit scores. These people claim that their low credit scores are somehow not their fault. These people claim that the credit card companies kept sending them more and more credit, and that they just "had" to use this additional credit. Are these people serious? We reap what we sow. It is amazing to me that a person can abuse their credit privileges, and then complain about the penalties that are assessed as a result of their abuse. These complainers are proof that the system is fair and is effectively working. If the credit rating system was unfair, these credit abusers could continue to take advantage of their credit privileges to the detriment of responsible credit users.
Another common complaint that people make is that they have no credit score before they apply for credit. The argument that these people make is that they have never had debt, therefore, they should have a high credit score. How does this make sense? A credit score measures a person's creditworthiness. Therefore, how can one have a credit score without first having credit? This is not a hard concept to understand.
The system is not perfect, but it is fair. I have had my credit score reduced due to negative information being placed in my credit file that was not mine. I had to get the information removed by contacting the credit bureaus. I would be lying if I said that the information was immediately removed. In fact, it took a couple of months to get the information removed. I was not happy, but mistake happen. If the system was perfect, there would be no complaints.
The point is, the system is as fair as it can be. If you feel that the credit rating system is unfair or unreliable, pay cash for everything. If you cannot afford to pay cash for everything, stop complaining about the system and use the system to your advantage. If you use your credit responsibly, you will have nothing to worry about.
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No
by Anthony Megna
Created on: September 06, 2008 Last Updated: November 24, 2010
Not only is the credit rating system unfair, it is riddled with inaccuracies! It is flawed, because the communication they receive from credit card companies is incorrect! The credit card companies are "stacking the truth".
Let me give you an example. Suppose you have a credit card that decides you have too high a debt to credit ratio. Guess what they do? They lower your credit limit. When they lower your credit limit, it is very easy to go over the limit. Keep doing that and you are reported to a credit agency. Is that fair? Of course not. But the greedy credit card companies do it all the time. The reason why they do it is to collect the fees associated with going over your limit. Nice, isn't it?
Banks also used to do something similar. Assume you have a debit account and have one hundred dollars left. You have been shopping all day, are tired, but you need one more item. The item is over one hundred dollars. The banks will let the purchase go through so they can collect the fee associated with going over the limit. Now you have to authorize the charges, but it's the history of all the banks that tells me they are just in it for the fees. The banks make a ton of money on all sorts of fees, and this is just one more example of their greed. Doesn't sound ethical does it? Credit card companies are worse.
The credit rating system doesn't really check on anything except noting when and where you went over your limit. Or were late on a payment. It seems they will note anything down that a credit card company or a bank sends them. Trying to get these items removed is harder than breaking into Fort Knox.
The entire credit rating system needs to be overhauled. So much is based upon these ratings, that it makes it tough to do business such as buying a car, let alone buying a house. There needs to be an investigation on these agencies, and another fairer system needs to be put in place. It is just horrendous what some people go through.
What about identity theft. You are just plain screwed when this happens. Not only is your credit destroyed, it takes an awful lot of bureaucratic bull crap to weed through straightening this nightmare out. It can take years in some cases. When you have some time go ahead and read the horror stories on the Internet. It will send chills down your spine.
No, the credit rating system is not fair. Not at all. To think that people believe the garbage on these agencies books is a joke. The problem is, it is very tough to remove it. It is like something has invaded your life and you don't know what it is. In fact, it is downright scary.
Let's call for a congressional investigation on the credit reporting agencies. They are already investigating the leeches doing business as MasterCard and Visa, which they should have done a long time ago. Now it is time for the credit rating agencies!
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