I'm normally the one that likes to post diaries containing strategic analyses, framing issues, and other more wonkish stuff--outside of the dosage of Spider Fridays that it is my pleasure to present to you at the end of every week. I don't usually post rants, or personal stories. That's not my style.
But I just did something today which ended up making me more angry than I've been in a long while: I checked my credit score.
Wanna find out why I'm pissed? Read below.
First off, I'm 23. I bought a Prius this past November. I've been paying it off at twice the amount due. I've had at least one credit card since I was 17. I have three now, each of which is used for a particular purpose. In nearly six years of credit history, I have never missed a payment on any of my credit cards. Outside of my car, which is an installment (obviously), I am not in any major debt.
Well, I decided to check my credit score just to see how it compared, and to help plan in case there are any other major purchases I need to make in the future. It also doesn't hurt to check, just in case somebody has opened up an account in your name or something (I've been the victim of identity theft once before, but thankfully no money was stolen).
So I decided to take advantage of my lawful right to get a free credit report once a year, and went to Annual Credit Report--the site set up by the FTC to accomodate free annual requests from each of the three major credit reporting agencies--Equifax, Experian and Transunion.
I printed out my credit history from all three, and then paid an extra $7.95 to Equifax to process my estimated FICO credit score. It's the number that lenders use to determine if you get credit, and if you do, what type of rate you get.
My rating?
657. Poor.
Yes, me. I, who have never missed a credit card payment or a car payment. And why?
Well, a year and a half ago, I was a co-signer on a second deed of trust for a mortgage for a condo that my parents were buying. I was put on as a co-signer, ironically, so I could improve my credit history by having a successfully paid mortgage on it.
As it turns out, nobody had received any statements for about 2 months after the transaction was complete. So I contacted the mortgage company myself to figure out what was going on, and it turns out that they had sent statements to the wrong address, and those statements had come back undeliverable. I asked them why they didn't contact me the first time it happened, and requested that they fax me a statement so I could pay the charges. I did, and then said explicitly that I expected that this incident would not go as a demerit on anybody's record, since it was the lender's error concerning the address. The rep assured me that that would be the case, and I didn't worry about it from that point on. All the payments were made all the way up until the sale of the condo a year ago.
I took a look at the explanations for why my credit score was "poor"--and the first thing on the list? A recent late payment on an account. Indeed, the mortgage company had reported a late payment on my credit. And because of that one incident--which is not even my fault--they decide that my credit is poor and I'm a high risk for default.
BULLSHIT.
First of all, I've taken all the appropriate recourses. Filed disputes with the agencies. Done all that. But I'm not under the impression that this issue will be cleared without months of haggling, repetition, cursing, and countless hours on the phone.
What this really got me to thinking about is the disgusting, corrupt system that is credit scoring. First of all, let's say that the demerit is my fault. Let's say, that through either ignorance or through financial hardship, I actually had been unable to pay my share of the second deed of trust within 30 days of the due date. Why is that one incident enough to outweigh my six years of impeccably perfect payments? One late payment, in one month, on only one account, in over six years--and all of a sudden, I'm a high risk of default. Sure.
You really think that's what lenders are thinking? I certainly don't. I think it's a corrupt, predatory racket. I imagine that this demerit probably made me pay a higher interest rate on my car when I bought it in November. I'll bet that mistake by the mortage company cost me a couple thousand in the long run.
It's a system of punishment. You are not allowed to make even one mistake, or have one bill get lost in the cracks if you move or something like that. They don't really think you're a risk. They just use this arbitrary FICO system as an excuse to be able to jack up your interest rates and call you a risk. And because lenders make money because of it at the expense of the consumer, nobody will complain.
The FICO system isn't a rating. It's a mechanism for systematized theft. A money-laundering scheme for organized crime. It's fucking repulsive.
And you want to know what made me even more ill? The fact that I'm very competent with regard to dealing with these matters. The fact that I know my legal rights. What about all the people who don't? What about all the people who don't know what their recourses are? All of those people are getting screwed by the system even worse than I am.
This is people's lives we're talking about. Lives aren't determined by a number.