by Nikki Edmonds

Created on: February 23, 2009

The credit reporting system is unfair for three main reasons. First, it unfairly stigmatizes the poor and working class. Second, it is single-handedly responsible for the epidemic of identify theft. Thirdly, it erodes our civil liberties. In fact, it tosses them into a huge trash heap.

When the credit reporting system first began, it involved voluntary participation and was used for luxury purchases. As the industry evolved and it's well-paid lobbyists maneuvered their way through our successive Congresses, the participation ceased to be voluntary and credit reports are now used for necessity-of-life purposes such as getting a job, driving an economy vehicle, or living in an apartment - any apartment, regardless of its quality. The only entities that do not check credit where driving and living indoors are concerned are lenders of last resort who gouge people of limited means on interest and landlords of last resort who rent sub-standard housing in risky neighborhoods. For the poor and working class in our society, the credit report and the FICO score become a scarlet letter for those who've had a rough time of it, often not because they accepted and used credit and then were unable to pay the bills but because they were unable to pay the rent, a utility, or medical bills. And when creditors use the FICO score to determine interest rates, and they do - regularly, they give the best rates to those with the highest scores and the impossibly high rates to those with the lowest scores. It almost becomes economic eugenics in that the interest rates and rent deposits that those with lower scores are forced to pay often take them out of the game entirely. Segments of our population incline to the opinion that those who pay their debts deserve the reward of better interest rates and render character judgments about those who do not. Sometimes, a character judgment can be rendered. Sometimes, a family is just trying to live on too little money and no amount of frugality is going to lessen the damage. This system risks leaving children hungry or leaving them susceptible to being forcibly removed from their parents, who can neither house nor clothe them. One thing connects to another; if you can't get a job, you can't get an apartment, if you can't get an apartment, you can't get a job. In a sizable sector of our population, the credit reporting system actively threatens children and families. Even when this group manages to get ahead a bit, to make a little more money,

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