We were turned down for a small loan last month.
My wife wanted a new sewing machine that cost a couple thousand dollars. The seller suggested that we could finance half of that for zero percent interest for a year - so I said "why not". It would not have been a problem to pay cash for the machine because we easily had that much money in the bank but since we are retired we thought we would use someone else's money at zero percent rather than our own. My wife called me from sewing show where the seller was working with her on the purchase and was in tears and utter embarrassment because our credit had been denied.
But why was the credit application denied? After all we live in a fully paid for million dollar home, have absolutely no debits (no car payment, no credit card payment, nothing else, Nada), a good income from retirement and Social Security and we have never been late on any payment like utilities, phone etc. We have not charged anything in the last ten years.
Sounds like the right place to be for anyone and should yield a sparkling credit report - Wrong.
After checking our credit score with the three credit agencies we found that our score was average. Not bad, not good - just average and not good enough to warrant a stupid $1,000 loan from a 25% APR loan shark like General Electric Bank.
The problem clearly spelled out in the report was that WE WERN'T IN DEBT. Yes you have to be fully in debt up to your eyeballs to be considered a good credit risk. You have to have an active record of buying crap on credit and paying back the note and the interest to keep the loan shark happy even if the interest comes from things that you should be paying for like education, health care, charity giving or simply enjoying your free time.
It didn't take long to decide that we would rather have an average credit report and no debit than a great report and huge loans to payback every month but this is system simply not right. Its no wonder that the US credit system is screwed if these are the rules(and they are). You are encouraged to place you family in debt for the remainder of you time on earth because that is what keeps the fiction alive that as a country we are well off.
Credit reporting is a trap and if I hear that damn Free Credit Report dot Com commercial, which buy the way is anything but free, one more time I'm going to scream.
Stay the hell away from loans of any type.