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July 12, 2010

Credit Score Inequality: The New Cruelty

credit scores--1104847660_v2.grid-4x2.jpgMore social injustice...

Figures provided by FICO Inc. show that 25.5 percent of consumers — nearly 43.4 million people — now have a credit score of 599 or below, marking them as poor risks for lenders. It's unlikely they will be able to get credit cards, auto loans or mortgages under the tighter lending standards banks now use.

...On the positive side, the number of consumers who have a top score of 800 or above has increased in recent years. At least in part, this reflects that more individuals have cut spending and paid down debt in response to the recession. Their ranks now stand at 17.9 percent, which is notably above the historical average of 13 percent, though down from 18.7 percent in April 2008 before the market meltdown.

I think what's needed here is some kind of redistributive policy for credit scores. Maybe folks who have credit scores that "exceed their needs" could be forced to donate points from their credit scores to those who aren't lucky enough to have high scores of their own?

Discuss amongst yourownselves.

Posted by Cassandra at July 12, 2010 12:13 PM

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There's no need for that. The government can simply co-sign the loans of the people with poor scores, thus making all of us with good scores -- also known as "taxpayers" -- effective co-signers as well.

Problem solved. Loan away!

Posted by: Grim at July 12, 2010 02:34 PM

Exactly Grim ... the new rules imposed on credit agencies favor those people who can't handle their own finances, and punish those of us who can by making us pay higher fees.

Posted by: Frodo at July 12, 2010 02:39 PM

Exactly! But Republicans are stuck on their policy of "default-penalty cuts for the creditworthy," when it's obvious that the people who really need default-penalty cuts are the ones in hock up their eyeballs.

Posted by: Texan99 at July 12, 2010 02:39 PM

When is Obama going to put his money up on the national loan, eh?

I thought blacks said he was poor, like them. What happened to solidarity.

Posted by: Ymarsakar at July 12, 2010 02:42 PM

Loans? Let's just cut out the middlemen. There's a housing glut, just give these people the houses free and clear. Put it on the Big Ol Deficit Card and move on.

Somehow, somewhere, Speaker Pelosi can tell us it's good for the economy.

Posted by: Allen at July 12, 2010 03:00 PM

That suggestion, Allen, could almost be done constitutionally: use eminent domain to buy up the houses at a "fair market price," (and what is the fair market price for a market that's glutted to the point that no one is buying? It seems like the government could give itself a substantial discount over what the market is asking-and-not-getting); and then give them away.

Now the next problem is: having given everyone a free-and-clear house in places like Detroit, where housing is readily available and cheap, they need a job near that house. Where is it coming from? Well, the government can simply hire everyone at some GS rate, and pay them out of taxes. They can be tasked with... hm... cleaning up Detroit, which is a hellhole right now.

Happiness for all is just a few more government programs away!

Posted by: Grim at July 12, 2010 03:12 PM

You're giving me Hope Grim

Posted by: Frodo at July 12, 2010 03:41 PM

You're giving me Hope Grim

You can have all the Hope you want, buddy - just don't ask me to fork over my spare Change...

Posted by: Grim's Sofa Cushions at July 12, 2010 03:47 PM

Grim, you left out a few items. A car from GM which helps GM out, a bank account from a bailed out bank, and all the free food you want from California.

You do know, California will be getting that sweet bailout cash pretty soon don't you? Gaacckkk.

Posted by: Allen at July 12, 2010 04:09 PM

Where is it coming from? Well, the government can simply hire everyone at some GS rate, and pay them out of taxes.

Helk, even given Obama's claim of 2.8mm jobs "created or saved" (*cough*bullshit*cough*) and Recovery.gov's reported figure of $420B in Funds Paid Out over the last year we've already paid almost $150,000 per job. It would have been cheaper just to provide the unemployed with a gov't job digging ditches and filling them back in.

Posted by: Yu-Ain Gonnano at July 12, 2010 04:24 PM

Grim, are you sure we haven't already done that? The taxpayer owns most of the home mortgage paper in this country now. The gap between "lender" and "occupant" is getting harder and harder to distinguish.

Posted by: Texan99 at July 12, 2010 04:47 PM

Actually, T99, that was my original intended point: we've already "resolved" this issue, between HUD rules designed to "ease" lending standards, and the government's readiness to buy out failed mortgages and pay them off out of taxpayer money.

In that environment, who cares about your credit score?

Posted by: Grim at July 12, 2010 05:04 PM

You know, I don't actually have a sofa? We gave ours away when we moved to China, and I've never gotten another one. I really should, but I like having the open floor space for exercise, chasing the dog, wrestling the boy, etc.

Posted by: Grim at July 12, 2010 05:06 PM

"...use eminent domain to buy up the houses at a "fair market price..."
*makes note to self: Change Hodgdon Varget power order from one pound to 16 pounds*

Posted by: Winston Smith at July 12, 2010 05:47 PM

Grim - movers like you better if you don't have a couch. And then there is, as my dear brother and sis-in-law discovered, the problem of couches without hinges. Two inches clearance through the door was OK, but it needed to bend in the middle to be able to get around a corner to said door.

Considering all the Guvment Motors vehicles that have appeared at national parks and monuments this year ("your stimulus dollars" et cetera), the feds handing out cars to go with federally-assigned housing makes sense. I suspect somewhere a memo is circulating that suggests offering a house to people in things like Teach For America or one at a discount when you come back from Peace Corps work or something along those lines. And a bureaucrat who is shaking his/her/its heat going "no, no. That implies you have worked for it, and that is unfair to the disadvantaged and oppressed."

Posted by: LittleRed1 at July 12, 2010 06:14 PM

The housing market may have nearly reached its maximum craziness, but the credit scores are relevant to other kinds of borrowing as well. You yourself are proof that we have a great deal of work to do in ensuring that all American homes are fully supplied with sofas. Did you confess this in your census return?

Posted by: Texan99 at July 12, 2010 06:45 PM

Yes, we should have a cap and trade thingy for credit scores. You really don't need anything over a 700 FICO. You should be able to sell those excess points ;-)

Posted by: Kevin Raffay at July 12, 2010 06:57 PM

They didn't send me a census form, nor anyone else on our road. According to the Census Bureau, this road does not exist.

However, we were counted! I went down to the library and got copies of the fill-in-by-hand ones they were passing out to illegal immigrants ("Please take this form if you believe you may not have been counted for any reason").

Posted by: Grim at July 12, 2010 07:07 PM

I don't own a sofa, I don't want a sofa (I can't pick it up, a non-negotiable rule for furniture in my house)but if I did, I could find all the ones I wanted in the ditch on the way to the dump. Can I get a tax credit for thinking about getting a "Free" sofa and stimulating the economy?

Posted by: Oh Hell at July 12, 2010 11:30 PM

Maybe folks who have credit scores that "exceed their needs" could be forced to donate points...

That sounds oddly...prophetic. People used to give to charity and help out their neighbors voluntarily...then the government started doing it by force through taxes and handouts.

You can still 'share' your credit score with someone to help them get credit - I can't recall the term for this. The Democrats tried to outlaw this, but when confronted with parents that would no longer be able to help their kids get loans and such they backed off, so it's still legal...you can do it - voluntarily. Makes perfect sense that the Democrats, unable to ban it, would instead make it mandatory ;)

You should be able to sell those excess points You sort of can. I think they have websites where you hook up with people with crappy credit and they use your score to get credit...if you dare, of course. I don't know that there are restrictions on getting reimbursed for doing so. The deal would likely lower your own score somewhat in the process, so you're pretty much selling your points to someone else.

Posted by: Falze at July 13, 2010 09:14 AM

I thought you were talking about a co-sign for a brief moment there Falze, then I remembered reading about this some time ago.

Judgment ain't what it used to be, nor would it seem, is common sense.

Posted by: bthun at July 13, 2010 09:47 AM

bt, I incautiously clicked on your link and . . . I'm stunned. The only thing left for Our Hostess to push in the way of satire, in order to differentiate her piece from real life, is to have the government step in an redistribute the credit scores by force. Which, frankly, isn't all that far, either, from where we've come. It's just that a taxpayer-guaranteed intermediary steps up to loan its (our) credit to the struggling family.

Posted by: Texan99 at July 13, 2010 09:54 AM

The catch is the government.

Posted by: Ymarsakar at July 13, 2010 10:22 AM

Sorry Tex.

In the past I've mentioned using the movie Brazil as a satirical pressure relief valve. Lately, it's not been workkkkkkkADGLjqergfoiujba...

What the #3!!

Just now, my desk slid, with extreme prejudice, into the wall!?

Posted by: bthun at July 13, 2010 10:58 AM