Credit score encourages spending

credit score comic

Isn’t the credit score system nuts? It seems to punish savers and encourage spending.

Why am I saying this? Today I looked at my FICO score from my bank. It had two suggestions at the top. One said that I needed to have an installment loan, and the second said I need to carry a balance on the credit card. This is financial responsibility?

It explained that without a recent installment loan I was less attractive to a lender because they didn’t know if I could handle it. Doesn’t my past history demonstrate that? Isn’t that the entire point of paying things off? Why do you constantly need to have an installment loan to prove that you have the income to pay for one? Why is consumption rewarded and not saving? Why do we need to spend to be valuable in capitalism rather than being valuable for saving as well? How about an improved credit score when you can show emergency savings?

It is clear why a credit scoring system that is built for credit card companies wants you to keep a balance on your card. I don’t believe in paying interest if I have a choice. In the past, I had to pay interest because I was young and inexperienced, but now that I am older and wiser interest isn’t such a good deal to me. What exactly am I getting by paying interest to credit card companies? A score that is slightly higher? My score is high enough to buy a big ticket item, so why try to squeeze people for their last dollar? Wouldn’t it be better to encourage responsible and rational savings habits so that people don’t become bankrupt or homeless/jobless?

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I had a girlfriend once who declared bankruptcy and I was amazed at how easy it was. She filled out a form and I went to the courthouse with her. Then someone asked her some questions and they granted her request. She really was poor and that helped her greatly but I had never considered filing for bankruptcy. How about a credit score bonus for people who have never been bankrupt? How about rewarding people for paying any kind of installment loan? How about making all interest above 5% illegal no matter what their credit score says? There is a great deal of abuse in the financial system and people can be responsible and also have poor credit scores. I know because I used to be one of those people.

Why is every system in the US abusive to the average citizen? Can’t we have one system in the US that isn’t rigged against people?