Most people think having a good credit score is necessary. Credit is important if you're living under its rule. This is the most successful marketing lie that exists in the financial industry. It only matters if you "buy" more money than you have resources or equity. Unfortunatey landlords, insurance companies, and various other companies have started using it as a guide. It is the lazy mans evaluation of a person's creditworthiness. Unfortunately, since there are so many
errors on credit reports it has become an unreliable source of evaluating creditworthiness. Getting these errors corrected is a formidable task. While you are correcting them, more errors appear. It is a losing battle.
Despite what most people think, the credit bureaus don't work for consumers, they work for creditors. They will not accept any information from a consumer without undisputable proof, while the creditor just simply needs to make a claim and it is slapped onto your report unverified.
What's more, the scores themselves have now become a way to
rip off consumers. There is the FICO Score (considered the standard), and then each credit bureau has their own proprietary score. They have started giving away "free" credit reports, which are little more than bait for subscriptions. The consumer thinks they are purchasing accurate information, when each bureau is likely to have vastly different information, and the score they give looks higher than the actual FICO score. There is a
lawsuit in progress attempting to address this.
You even have to be careful about who you get your financial advice from. Suzy Orman is in bed with Fair Isaac and touts the value of a good credit score because she makes money when she does. However, Fair Isaac has recently settled a
class action lawsuit against them involving Suzy Orman and her "FICO kit" for claims that they violated the federal Credit Repair Organizations Act and various state laws. They got away with providing "free" 3 to 6 month subscriptions. Ironic, since the FICO score marketing is all about improving your score, yet the scores continue to be fraught with countless errors, helping them continue to sell credit repair for their own mistakes.
The truth is that if you don't borrow money, the FICO score formula gives you a poor rating. In actuality, you are the lowest risk. Lenders who pay attention to what they are underwriting will see this. The
score means little in the end with lenders who pay attention who they are lending to. As for the others, the landlords, the insurance companies, and employers. You can simply point out the errors and usually get past this screening. If you don't borrow money and tell them this is your policy, they should think highly of you regardless of the zero FICO score.
This is a draft... your comments are welcome.
The approach of the singularity has many effects. One is increasing sophistication of scams and ripoffs. As our knowledge of human psychology increases, the greater ability those with that knowledge have to influence people, whether for good or ill.
The banking industry spends billions of dollars a year on advertising [how much?], more than the entire automobile industry [says Dave Ramsey]. The goal of this advertising is to get you to buy the products of the banking industry, and to make the banks a profit. Indeed, an even greater profit than the billions spent on advertising (since otherwise the money spent on advertising would be a loss).
Truly effective advertising is advertising so pervasive that other people, people you know, people you respect, repeat the message. With every good intention. Your friends. Your parents. Writers in newspapers. All telling you the same thing, the same message. Because they too have heard the message from advertising, and believe.
All of us have the universal experience of having gone to school having been graded. And so what could feel more natural than being graded on your credit? And indeed, the banking industry is moving towards a new scoring system, guess what? A letter grade. A, B, C, D, F.
The credit score does include whether you're late on your bills, such as if you're behind on your rent, or have medical bills that you haven't paid. The rest of the score is based on how deeply in debt you are, how much you are paying in interest, how much profit you are making the banking industry.
You can't have a high credit score without going deeply in debt and staying deeply in debt.
Your credit score doesn't even reflect how well you are doing financially. You could make a million dollars tomorrow and it wouldn't change your credit score by a single point. Why? Because you're not making any more money for the banks.
There are other lies that go along with the lie that you should want a high credit score. For example, that you need a good credit score to get a good rate on a house mortgage when you buy a house. This is a lie. You qualify for the best interest rate on a house mortgage if you have paid your landlord early or on time for two years, and you are not behind on your bills. You do not need to get a credit card to "establish your credit" so that you can buy a house.
In this life, you have 20,000 days to live before you die. You trade some of this precious time for money by working at a job. Your choice is then to take some this money, this part of your life, and give it to the banking industry in the form of interest on debt payments. Impoverishing yourself and enriching them.
[tie back to psychology, ability to try multiple advertising approaches and to find the one that's the most effective?]
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