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Credit Scores: What They Mean and Social Control

Credit is a big business and the credit industry business it very large. Yet it is something that most of us take for granted as been valid, relatively accurate and legitimate. But as the Exception is said to prove the rule the rather extreme perturbations of the Credit System should convince us that something is “amok” and that it is not what it seems to be.

Credit is useful in terms of credit cards; obtaining lines of credit; purchasing a vehicle and using collateral to purchase a home or other real estate. We grow up assuming that credit is fair. We come to believe that it is a system of ascertaining "riskiness” and safety. But in some ways, Credit is as deceptive as unregulated Credit Default Swaps where giant companies and investment banks often hedge bets that some untoward event will not happen.

Theoretically a person with a “good” or a high credit score is one who is a rather active borrower, who is fastidious and compulsive about paying obligations in a most timely manner. Those who default repeatedly or chronically; who have no borrowing history; or who are down on their fortune (luck), become those with the lowest scores. (Scores are not a separator of good and bad people.)

Banks love credit cards and especially those who pay, pay and pay but who are late and over the limit and thus incur triple charges of high interest, late penalties and over the limit charges. They earn hundreds of billions of those otherwise deemed bad risks. Those very few individuals who never borrow because they have no need to, would have lousy credit.

But where is the “rat in the cellar” in terms of credit. Credit scoring the lifeblood of a corporate giant such as Dunn & Bradstreet. Otherwise, TRW, Experian and Equifax run the monopolies. Among other things, the algorithms and formulas for computing credit are trade secrets never to be disclosed. For decades, we've been advised that the process of having credit checks done on us, lowers our credit score, although that act of checking one's score has nothing to do with credit worthiness. But recently Experian with its “experian.com/boost advertises the notion that we can improve our credit score perhaps 15 points by doing nothing other than visiting the website and following instructions. Those two facts, in and of themselves, suggest that the credit scores are farcical and invalid and dependent on events having nothing to do with credit.

But also very important is the reality that credit scores are wholesale stigmatizers intended to punish and hurt who have a poor record of payments. They are seen as morally deficient and irresponsible but even if their excuses and defaults are related to being a cancer survivor; having had a heart attack; having been orphaned or being the victim of some accident that was not our fault. But once a person is jettisoned onto the bad credit skids, bad credit feeds on itself and becomes a self fulfilling prophecy. Moreover, "undesirable credit” is punished with less buying power; higher interest and essentially more uncomfortable purchase terms thus self catalyzing the risk of subsequent defaults followed by tumbling credit scores. The process is vicious and a marvelous technique of control by the “haves” over the have-nots” and a wand and boon to skewing society, even more extremely into "richer and poorer.”