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No. of Recommendations: 4
Speedsurfer writes:
Anyone that has paid off a mortgage is not stupid to me, so why do you even care what your FICO is anyway? Everything else in life can be bought with cash.

Your FICO score affects a lot of things. Just yesterday I received a letter from my insurance company (home). They reviewed my credit and because of my score, my rates are going up. They seem to think that this score has a determination on how likely you are to make a claim.

Grrrrr. That score makes me soooooo mad. Here's my situation. We have a lot of debt—Personal Loan and CC debt, 1 car payment, 1 lease payment, and a mortgage. In the last 7 years we have NEVER missed a payment and was late only once – on a debt that has now been paid in full. Yet because our debt/income ratio is high, our score is low.

So – yes, you're score has an impact on more than just your ability to get a credit card.
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No. of Recommendations: 5
I interviewed for a job as a computer based curriculum designer about two months ago. The interview went great, they loved my portfolio and the hiring manager said I would be hired pending a credit check. My FICO score of 570 is poor and I new I was in trouble. Needless to say they passed on me not because of my lack of talent but becuase of bad credit. That is plain wrong! That job was double what I make as a school teacher and could have helped to improve the credit rating as I was planning to dump any extra imcome into eliminating debt.

I'm being penalized for an important job that I'm more than qualified for due to a poor Fico rating. What ever happened to due process rights? Where's my due process in being labled a "credit criminal"? The big three collect information and that information is supposed to be used as a basis for getting loans and credit cards. Now, that same information is being used to determine if you'll make a good employee or if your insurance worthy. My car insurance went up in January because of my poor Fico rating. What the "expletive".

There's no due process!!! Meaning, you can't defend yourself or sue the living daylights out of them! There should be some kind of recourse or action that you can take against this. The information gathering practices and how it's used against consumers or people trying to just live is a violation of everyone's constitutional rights based on Due Process Rights and The Right to Privacy.

How do they expect you to climb out of the hole when they shove you in deeper?


PSC
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How do they expect you to climb out of the hole when they shove you in deeper?

The credit reporting agencies work for credit issuers. Credit issuers don't want you to climb out of the hole.
-steve
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No. of Recommendations: 1
The credit reporting agencies work for credit issuers. Credit issuers don't want you to climb out of the hole.

It doesn't seem to me that credit issuers would want to stop people from getting jobs, especially people who owe them money. The reason these reports get to so many people, such as employers, is because they are willing to pay for them.
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No. of Recommendations: 3
Personally I believe they want people to stay in that hole. It's a benefit for creditors if you stay there because you're a prime target for not-so-prime rates.

If they liked your talents so much but were that turned off by your score, do you really want to work with them? Sounds like they're too easily swayed by outside influences and not prone to making their own decisions anyway.

I believe you also have a legal right to a written explanation as to how your credit report played a role in their decision. I'd put them to it - make them give you that written statement.

-Al

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I cannot imagine why a computer-based curriculum designer needs a great credit score to do the job well, but maybe that's just me. Sounds like an employer I would not want to work for if my credit score were that important to them. I could see it if I were in charge of their money, but not for writing class materials.
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No. of Recommendations: 1
This can work to your advantage as well. When your credit score goes up you will start to see all of your insurance rates go down. Our car insurance rates are extremely low, as well as our home insurance rates due to our credit. I was actually told - (I don't know how accurate this is) - that your car insurance rates are as much a reflection of your credit as they are of your driving record.

Also, when we last moved to a new state and set up all of the utilities, phone, garbage removal, etc. - we didn't have to pay a single deposit. They just ran a fast credit check and set the service up in time for move-in date.
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No. of Recommendations: 1
That is great if you have good credit, but most people dont. These are all good points, I think that now the FICO is public, as people become more aware of how it affects their lives/rates/insurance there will be some public backlash and eventually probably some legislation. That could take a long time, but I think it will come.
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No. of Recommendations: 1
Bunchah and LuluB,

Thanks for the positive responses. Since joining and participating in just a few short days I've gained a lot of information and confidence. I will ask them in writing as to an explanation of why I wasn't hired based on a poor credit performance.


This practice should be made illegal as it is a direct violation of constitutional law.


PSC
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No. of Recommendations: 2
foolishinTX said, "They reviewed my credit and because of my score, my rates are going up. They seem to think that this score has a determination on how likely you are to make a claim."

Someone from Progressive insurance came and spoke in my Advances in Information Systems class the other night. Here is the scoop on the credit rating and insurance.

They feel, and they have statistics to prove it (there are lies, damn lies and statistics) that your credit rating has a direct relationship with your tolerance of risk. It is an interesting thought. Apprently, rich people with bad credit ratings are a greater risk then poor people with good credit ratings.

Here is a thought, if you insurance company has raised your rate, get a couple of quotes from other companies. The problem with statistics is that individual differences average out.
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I'm going to start checking (was going to anyway) different companies. What gets my goat is that I've had homeowners insurance with the same company for almost 5 years and before that we had renters insurance (different company) and have NEVER filed a claim. THAT seems to have no bearing.

I've never filed an auto insurance claim either. I've had accident's but because they were the other driver's it went on their claims -- not mine.

Going back to the low FICO --- the fact that, although my debt is high, I've NEVER EVER EVER defaulted doesn't have much bearing.
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No. of Recommendations: 0
cesteacher-

I really feel for you. I had a car repo 4 years ago, which demolished my rating. Long story, but I bought the car when I was making a decent amount at a part time job and had just passed to become a liscensed real estate salesperson. I was still in school so I had no rent, so I bought a nice car thinking it would be OK to splurge because I was working hard. Fast forward to a year later; real estate market had one of the lowest turnover rates in recent history, people stopped going to the bar I worked at for some unknown reason, mom gets sick so I have to take over school loan payments. Next thing you know I'm behind on payments and the car gets repo'd. I was shaking in my boots when I applied for my present job, but they apperently looked over my past indiscretions because they were far in the past. I was later told that had it been within two years I probably would have been passed over.

Anyway, keep your head up. Keep at it and things will eventually work out.
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No. of Recommendations: 8
There's no due process!!! Meaning, you can't defend yourself or sue the living daylights out of them! There should be some kind of recourse or action that you can take against this. The information gathering practices and how it's used against consumers or people trying to just live is a violation of everyone's constitutional rights based on Due Process Rights and The Right to Privacy.

Not to be negative, but:

You can certainly defend yourself. Pay your bills. On time. Every time. Don't carry large balances on credit cards.

If your score is low due to inaccurate information, have it removed. Although I've never had any difficulty in removing inaccurate information, some folks have. You can sue over this. (Some folks advocate suing over accurate info, too, but IMHO, that's unethical.)

<scanning Constitution>
Due Process usually applies when one is being imprisoned for committing a crime. Did Experian have you arrested? The information being collected comes from a variety of places; either business you have a relationship with, where you have consented to sharing information with a credit reporting agency, or from public records. Nothing sneaky, no one is searching your home illegally. If you don't think you consented to credit reporting, reread your contracts with your creditors again - it's in there.

No mention of a right to privacy at all. But, as previously mentioned, you explicitly consent to credit reporting about your accounts, and other information is public record, with no presumption of privacy.

Having said all that, I'm sorry your credit rating is causing problems for you. I wouldn't want to see credit reporting suddenly vanish, though; without large databases and scoring models, credit would not be available to a significant number of people who can benefit from it.
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No. of Recommendations: 10
That is great if you have good credit, but most people dont. These are all good points, I think that now the FICO is public, as people become more aware of how it affects their lives/rates/insurance there will be some public backlash and eventually probably some legislation. That could take a long time, but I think it will come.

This is sort of disturbing. "Now that folks realize how important good credit is, instead of taking responsibility for their credit rating, they should whine and complain until big government makes the bad number go away."

Why can't the 'public backlash' be something like "People will become more responsible with their money and credit" ??
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This practice should be made illegal as it is a direct violation of constitutional law.

If the practice is in violation of Constitutional law, it's already illegal.

On the other hand, I doubt seriously if it's illegal. Companies have run background checks on employees forever; credit checks are just one more tool.

It's just an extension of the ancient practice of calling your references...
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Having said all that, I'm sorry your credit rating is causing problems for you. I wouldn't want to see credit reporting suddenly vanish, though; without large databases and scoring models, credit would not be available to a significant number of people who can benefit from it.

I don't have a problem with it affecting my ability to get credit. I have a problem that it effects other areas of my life that do not involve the way I handle money -- i.e. my driving, my risk for theft or fire, my ability to perform my job!
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Well, just to play the devil's side.. ;)

The fact that you are willing to carry large balances is evidence of your willingness to take risks.

When I asked the person from Progressive about the effect that risk prone drivers have on risk avoiding drivers his response was that apprently the risk avoiders get in significantly fewer accidents in general (regardless of fault). I can hear my father's lectures on defensive driving now. Arg.

One thing that continues to bother me is that there are people who are so risk avoiding that they pay cash for everything and have not credit rating... maybe those are the people on the freeway that drive 5 miles under the speed limit when everyone else is going 10 over and zooming around them.

Eventually the credit card companies will cut us down into subgroups so small that we will be a subgroup of 1. (humor)
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Sorry -- not seeing how my credit balances affected how I got hit sitting at a traffic light (accident #1) and at a stop sign (accident #2) both unavoidable by me (except not being on the road). Accident #2 was car did an illegal U-turn and I hit him -- Policeman saw it and said I couldn't have avoided it.

These would have happened if I had a 0 balance. Oh yeah -- the first one happened when I was debt free!
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No. of Recommendations: 2
bstroh,

A judgement was passed down from a higher authority ie: I was denied employment due to credit problems. What or how do credit issues have to do with my character and my ability to do a job well. I believe that financial institutions have the right to check on credit history as they are taking a risk. That is not the problem.

The problem is that reporting agencies are now selling information to companies and others so they can make judgements in reference to employment and insurance. What does employment have to do with my finances ie FICO #? What does my credit rating really have to do with my insurance premiums? The answer: Nothing.

All "Due Process" is fair treatment under disciplinary matters and procedures (the law). Since I'm being disciplined for my poor credit, where is due process when I'm being accused but cannot defend the accusations. I believe I have the right to defend prejudice against myself as do all American citizens.

RIGHTS OF THE SOCIETY AND THE ACCUSED
Since a hiring body, corporations and insurance co., et al has the right to prescribe and enforce its standards for membership, it has the right to investigate the character of its members as may be necassary to this enforcement. But neither the companies et al nor any accused possible member has the right to make public any information obtained through such investigation; with the exception of through a trial in which case said information may become public and be used against either party. (Common Law)

I'd be willing to bet that credit reporting agencies would fear any kind of due process proceedings as they have it easy now. With proof from one party only they can now produce a damaging credit report with zero recourse with the exception of making a few changes. Once a negative or positive mark is on the report it's on there regardless of fact or fiction.

Let's also take a look at the Constitution for a second
I think it's the 14th Amendment section 1
I shall look it up! Yes it is.

No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United State: nor shall any State deprive any person of life, liberty, or property, without due process of law nor deny to any person within its jurisdiction the equal protection of the laws.

I do not deny that I've made mistakes on my credit report. However, I do not think it is right to use my credit report against me to determine "reference" for employment. I have professional references in my field and that is all that's needed.

As far as insurance companies are concerned: Profiteering!


PSC
cesteacher
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...the hiring manager said I would be hired pending a credit check. My FICO score of 570 is poor and I new I was in trouble. Needless to say they passed on me not because of my lack of talent but becuase of bad credit.

I have a problem with that too. It seems, well, wrong. I guess the idea is that you are more likely to steal from the company because you're more desperate for money(?) I know that it's also harder to get renter's insurance with poor credit, and I guess it's the same thinking. You're more likely to file a false claim because you're more desperate for money(?)

I'm very good about paying rent, but I was nervous when I had to find a new house a couple of years ago. Luckily, the landlord didn't do a credit check.

Wonder what their cut-off would have been for you to get the job.

--kerry
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What or how do credit issues have to do with my character and my ability to do a job well

People with financial problems are more likely to steal.
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The information gathering practices and how it's used against consumers or people trying to just live is a violation of everyone's constitutional rights based on Due Process Rights and The Right to Privacy.

I'm sorry to hear that your potential employer didn't feel that your credit score fulfills their qualifications, but i think sometimes people tend to be overly sensitive about the credit score/employment offer link that is so common. It certainly can be frustrating for people, but honestly you can't complain about Right to Privacy when you must have signed something authorizing the credit check. And I am really interested to know what article of the constitution the "right to privacy" is detailed in, because I've certainly never seen in.

My advice--stop being bitter about the lost opportunity, do everything you can to improve your credit situation, and try again another time.

d
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I cannot imagine why a computer-based curriculum designer needs a great credit score to do the job well, but maybe that's just me. Sounds like an employer I would not want to work for if my credit score were that important to them. I could see it if I were in charge of their money, but not for writing class materials.

Lenders consider your credit score a measure of your character, financial character in particular. Employers view it the same way. That is the general reason I was told that potential employees pull the credit scores.

d
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No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United State: nor shall any State deprive any person of life,
liberty, or property, without due process of law nor deny to any person within its jurisdiction the equal protection of the laws.


I don't think the 14th amendment is violated by the availability of credit info to potential employers, just based on my limited understanding of constitutional law anyway (1 semester and I didn't do so well in it either). This amendment deals with state actions, not private actions (of credit reporters or private employers).

But 14th amendment aside, I agree: what that potential employer did was unfair. Screening employees based on their credit rating is wrong, IMO. The argument (I've heard) is that if you have a bad credit rating it may mean that you don't honor your obligations, or are dishonest, or irresponsible -- all characteristics you don't want in an employee. But there are all sorts of other factors that contribute to a credit score, and assuming that someone isn't a good employee just because they have a bad score is just incorrect and unfair. I sympathize and share your outrage, cesteacher.

Let's not forget the other thing that is hard to get w/ a bad credit score: housing. In tough housing markets (e.g. SF Bay area, NYC), it is very hard to get a place to live if you have any problems in your report. I've been lucky -- my first landlord rented to me based on looking me in the eye for 10 seconds and saying, "I'm a good judge of character; you'll do fine." My current landlord rented to us after my husband showed them our wedding picture. "What a cute couple!" We've never been late on rent. Maybe more landlords should use this approach, saving the $10 on the credit report!
-RW
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In my previous post I said: <<I don't think the 14th amendment is violated by the availability of credit info to potential employers, just based on my limited understanding of constitutional law
anyway (1 semester and I didn't do so well in it either). This amendment deals with state actions, not private actions (of credit reporters or private employers). >>

I should emphasize that this is just a casual observation and not a legal opinion.
rw
:-)
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<<I'm being penalized for an important job that I'm more than qualified for due to a poor Fico rating. What ever happened to due process rights? Where's my due process in being labled a "credit criminal"? The big three collect information and that information is supposed to be used as a basis for getting loans and credit cards. Now, that same information is being used to determine if you'll make a good employee or if your insurance worthy. My car insurance went up in January because of my poor Fico rating. What the "expletive".
>>


Under the FCRA you have a right to have inaccurate information investigated and removed from your credit report.

The FCRA explicitly anticipates that credit reports will be used to screen people for employment. In fact, if the position you are applying for pays more than some limit ($50K or so, I believe) ALL credit information will be reported, regardless of how old it may be. No seven year dropoff or ten year limit on reporting bankruptcies.

And this is a very legitimate tool for employers to use, in my opinion. Financial institutions like insurance companies live in perpetual fear that employees will steal from them. People with poor credit records who may be desperate for money have 1) a proven inability to manage their finances and 2) too often money problems will tempt people to steal.



Seattle Pioneer
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<<I cannot imagine why a computer-based curriculum designer needs a great credit score to do the job well, but maybe that's just me. Sounds like an employer I would not want to work for if my credit score were that important to them. I could see it if I were in charge of their money, but not for writing class materials. >>


Trainers and other employees meet and interact in many different ways. I would expect such a person to come in contact with inurance adjusters, underwriters, customer service reps and so on. People who are financially desperate may begin identifying others who might co-operate to defraud or embezzle from a financial institution. Two or three people co-operating to identify financial checks and work around them can engage in fraud and embezzlement on a large scale.


Screening out people with significant financial problems seems pretty common sense if you can afford to do it. Employee theft is a big problem for business, and they are entitled to protect themselves from it by such screening methods.



Seattle Pioneer
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and the hiring manager said I would be hired pending a credit check

Did the hiring manager tell you that you weren't hired because of your FICO? Or were you simply told you didn't get the job after the hiring manager said you would pending a credit check?

I ask because many companies have had to cancel what were close to sure offers recently. Hiring managers don't always know when a hiring freeze is about to happen... or someone who was about to leave changes his or her mind... or a VP's nephew suddenly needs a job.

Bummer about the job -- but maybe the next one will be better!

-Michael

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<<Sorry -- not seeing how my credit balances affected how I got hit sitting at a traffic light (accident #1) and at a stop sign (accident #2) both unavoidable by me (except not being on the road). Accident #2 was car did an illegal U-turn and I hit him -- Policeman saw it and said I couldn't have avoided it.

These would have happened if I had a 0 balance. Oh yeah -- the first one happened when I was debt free! >>


Insurance fraud is a big problem.


I had a fire started by the child of a tenant in a rental property of mine. It was clear to me that the main thing the insurance adjustor was interested in investigating was any hint that this claim was a result of fraud of some kind.

I'd bought this house 5 years earlier for $38,000. The fire began as a grease fire, gutted the kitchen and smoke damaged the rest of the house, but did no structural damage. The insurance company handed me a check for $32,000 for the damages and lost rent. I spent $12,000 and a lot of my own labor not only to repair the damage but in major improvements and upgrades, and put $20,000 in my pocket on top of that. In other words, I made out like a bandit on this fire.

Such temptations to fraud and arson make it reasonable for insurance companies to be cautious about who they will insure. If credit checiks allow them to screen out desperate people who may find a fire to be a way out of problems, I certainly don't blame them.



Seattle Pioneer

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<<Let's not forget the other thing that is hard to get w/ a bad credit score: housing. In tough housing markets (e.g. SF Bay area, NYC), it is very hard to get a place to live if you have any problems in your report. I've been lucky -- my first landlord rented to me based on looking me in the eye for 10 seconds and saying, "I'm a good judge of character; you'll do fine." My current landlord rented to us after my husband showed them our wedding picture. "What a cute couple!" We've never been late on rent. Maybe more landlords should use this approach, saving the $10 on the credit report!
>>


I'm a sentimental schmuck when it comes to making decisions on who I will rent my properties to, and I've been burned over and over as a result. There are lots of very good liars out there, and I'm lousy at separating the tenant wheat from the tenant chaff.

After evicting one tenant, I had to take more than 13,000 pounds of junk they left behind to the dump.


Seattle Pioneer
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My husband is currently going through a background investigation for a firefighting position with a major municipality. A VERY THOROUGH BACKGROUND INVESTIGATION. Not only do they check our credit reports, but they actually require a complete balance statement from us with intimate details of each and every account. They run a criminal check and check if his name has ever appeared on a police report - EVER. Plus, they speak with EVERY employer and landlord for the past 10+ years. Then they knock on our neighbors doors to see what they think of him. Then they contact his old roomies and family members. During our friend's sheriff's background investigation they actually personally visited his old high school principal (she had even moved to a different school). They are requiring my DH to write a detailed narrative about his life, send all college transcripts, and fill out a questionaire the size of book (any prior drug use? Are you sure?). Then they will invite him to sit down with the investigator to "review" all the data submitted. They leave no stone unturned. I heard about 50% of applicants fail the background.
Another friend of ours takes the cake on investigations: He was going to work for a military contractor. They sent investigators all the way to Germany to interview his parents!!!

Many employers do A LOT more than look at your FICO. They simply can not afford any "bad apples".


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I wish I had the sense and knowledge I have learned the hard way to do some real investigation on the guy who is buying a property off me. Now I am stuck with him, he owes everybody, is a thief and a tax cheat and has a foreclosure action on his record which adds all kinds of a new low FICO for him.

I'm just waiting for the tax man to grab the place. At least the IRS will have to pay me off!

wdg :>
will be looking HARD for a decent tenant if she ever gets another property .
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Very Good Post al!!

Sean
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Go for it CES!!!

We are behind you!!

Slovell
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Bstroh,

Your response is a little self righteous. The fact of the matter is that people are taking responsibiloty they just downt want to keep getting beat up over it. Also they feel it is somewhat of an invasion or privacy. But it is a necessary evil.

Slovell
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In defense of myself and my own character since it seems I'm being judged by some. (Should have stayed lurking) Although, my FICO rating is low at around 570-600. I've only recently within the last 4-5 years got in trouble with creditors. I only owe around $3,000 in bad debt and am paying it off, establishing myself once again. Before grad school I worked for a defense contractor. During my tenure at this contractor I held a Secret (DISCO) clearnance. This clearance was held until I left the company in 1998. Grad school did put me in the hole financialy but it was a risk I took. If the FBI thinks I'm worthy enough to work on or near helicopters than I think I can work for a software company as a trainer. The FBI goes over you life with a fine toothed comb weeding out everything including credit history, character references, local and federal criminal background checks and even interview your neighbors, before you're granted any kind of clearance. I'm more than worthy and it's the software company's loss that they did not hire me. Within the year I will have paid everything off. The company that didn't hire me. Once again their loss. The doubled salary would have been nice and I would have paid off my debts alot earlier. So I remain a school teacher at least until the next opportunity comes along. Who knows what will happen?

PCS
cesteacher

As far as reporting indiscrepencies to credit reporting agencies (that is not due process) that is a procedure allowed to dispute not errase errors. It is a valid procedure and one that I've used. I seriosly think some kind of due process procedure is needed to not only to dispute credit report mistakes but also have them removed completey if found and or proven to be wrong. Since credit reports are used to judge and make desisions about simple things in life (home, property, employment, finances, insurance, life and liberty) shouldn't the American people have a right to dispute that judgement? Oh well got to get to class.

Everyone have a great day!

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Well Said FOOLISH!!

Slovell
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Dang CES!! Thatb was so good I had to make you a favorite Fool.

Sean
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Well I work for a mutual fund company and was told when I was hired if you are wanting a private life this is not the industry for you. I had to have credit check and be approved by all 50 states. :)
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Yes, I know this is OT, but I just wanted to make a nit-pick correction:

<snip>

14th Amendment

No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United State: nor shall any State deprive any person of life, liberty, or property, without due process of law nor deny to any person within its jurisdiction the equal protection of the laws.

If I remember my Con Law class correctly, this contains two very important caveats: the 14th A covers only "state" actions (NOT private corporations, individuals, etc.) and only requires "due process". That means that CC companies and credit reporting bureaus are not covered by the 14th A.

Further, as my Con Law prof jokingly noted, the 14th A *does* allow the state to deprive you of life, liberty, or property as long as they follow the proper procedures (to meet the "due process" requirement).

Sorry, just had to get that off my brain....back to your regularly scheduled programming.

CK
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I don't have a problem with it affecting my ability to get credit. I have a problem that it effects other areas of my life that do not involve the way I handle money -- i.e. my driving, my risk for theft or fire, my ability to perform my job!

Like it or not, there is a relationship between credit risk and insurance risk.

Your auto insurance rates didn't go up because your credit rating affected your ability to drive; they went up because folks with poor credit ratings (ie financial problems) have a tendency to make false claims, or embellish real claims.

Your risk of theft or fire didn't go up because of bad credit; again, your likelihood of filing false insurance claims did.

Your ability to perform your job wasn't affected; your likelihood of stealing from an employer went up.

Obviously, not everyone with poor credit turns into an embezzling insurance scammer. However, the likelihood is significant enough that companies have started paying attention to it, and compensating for it with increased insurance rates, and a more careful employee screening process.

With the way the world works today, every aspect of your life can relate to how you handle money.
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What or how do credit issues have to do with my character and my ability to do a job well

People with financial problems are more likely to steal.


BULL!


And this is a very legitimate tool for employers to use, in my opinion. Financial institutions like insurance companies live in perpetual fear that employees will steal from them. People with poor credit records who may be desperate for money have 1) a proven inability to manage their finances and 2) too often money problems will tempt people to steal.


BULL!

Warning! Loud and angry opinion follows. Read at your own risk!

Insurance companies checking credit rating should ONLY be done if the person requesting insurance requests financing, and should NEVER be used as a determination of premiums. Doing so is nothing more than unethical and immoral! Credit rating has NOTHING to do with anything but CREDIT RATING just as IQ tests measure nothing but one's ability to take IQ tests!

Credit rating being used by potential employers is ONLY valid when the desired position is a financial one. Otherwise, credit rating has NOTHING to do with anything but CREDIT RATING!

I don't understand why so many try to justify the inappropriate and IMHO unethical and immoral use of credit rating for anything but rating credit risk. That is what it is for and NOTHING else!

Sorry, but this makes me HOT!

No disrespect intended,
Jeff
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The problem is that reporting agencies are now selling information to companies and others so they can make judgements in reference to employment and insurance. What does employment have to do with my finances ie FICO #? What does my credit rating really have to do with my insurance premiums? The answer: Nothing.

Not true. If it had nothing to do with your insurance or employment risk, no one would go to the trouble and expense of verifying it. For a more complete discussion of this topic, please see post 66885; you've probably already seen it, so I won't repeat it here.

All "Due Process" is fair treatment under disciplinary matters and procedures (the law). Since I'm being disciplined for my poor credit, where is due process when I'm being accused but cannot defend the accusations. I believe I have the right to defend prejudice against myself as do all American citizens.

First, it's not prejudice. Generally, prejudice is defined as forming an opinion without information. The issue you seem to have is forming an opinion using the information on a credit report.

You may not like what's there, but that doesn't necessarily make it untrue. And, as I've said before, if it's untrue, dispute it and get rid of it.

RIGHTS OF THE SOCIETY AND THE ACCUSED
Since a hiring body, corporations and insurance co., et al has the right to prescribe and enforce its standards for membership, it has the right to investigate the character of its members as may be necassary to this enforcement. But neither the companies et al nor any accused possible member has the right to make public any information obtained through such investigation; with the exception of through a trial in which case said information may become public and be used against either party. (Common Law)


And this has what to do with credit reporting? As you've stated, certain bodies have the right to investigate the character of potential members. Surely you aren't saying that a person's credit history is not related to character?

Unless your potential employer posted a billboard indicating that you have lousy credit, or they bought ad space in the local paper, I'm not seeing any prohibited public disclosure.

I'd be willing to bet that credit reporting agencies would fear any kind of due process proceedings as they have it easy now. With proof from one party only they can now produce a damaging credit report with zero recourse with the exception of making a few changes. Once a negative or positive mark is on the report it's on there regardless of fact or fiction.

The 'exception of making a few changes' is substantial recourse - you can have false information deleted. As many posters to this board can tell you, removing false information isn't normally too difficult. In addition to the recourse you mentioned, you also have the ability to sue for violations of the FCRA. Note that you can't sue for negative, but correct, information.

No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United State: nor shall any State deprive any person of life, liberty, or property, without due process of law nor deny to any person within its jurisdiction the equal protection of the laws.

I guess I'm missing the relevance of this. Were you killed, imprisoned, evicted without due process of law? What state law allowed this?

I do not deny that I've made mistakes on my credit report. However, I do not think it is right to use my credit report against me to determine "reference" for employment. I have professional references in my field and that is all that's needed.

To you, that may be all that's needed. Apparently, others feel differently. Again, see 66885 for a more complete discussion of why credit matters to employers.

As far as insurance companies are concerned: Profiteering!

Or, adjusting premiums to reflect increased risk. But, I doubt we're going to agree any time soon.


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Saying that people with low credit scores or a history of past mismanagment of finances are MORE likely to steal is like saying that people who own guns are more likely to kill.

Both are huge assumptions in my opinion.

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Your response is a little self righteous. The fact of the matter is that people are taking responsibiloty they just downt want to keep getting beat up over it. Also they feel it is somewhat of an invasion or privacy. But it is a necessary evil.

I'm sorry you feel that way. I'm not changing my opinion, though. There seems to be a growing trend to get in over your head, and wait for the government to fix it. Guess who pays for government? The folks who aren't in over their heads...

We're left with two options: Be irresponsible, knowing dear old Uncle Sam can bail us out. Or, be responsible, but be responsible enough that you can pay to bail a few other folks out as well.
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As far as reporting indiscrepencies to credit reporting agencies (that is not due process) that is a procedure allowed to dispute not errase errors. It is a valid procedure and one that I've used. I seriosly think some kind of due process procedure is needed to not only to dispute credit report mistakes but also have them removed completey if found and or proven to be wrong. Since credit reports are used to judge and make desisions about simple things in life (home, property, employment, finances, insurance, life and liberty) shouldn't the American people have a right to dispute that judgement? Oh well got to get to class.

Uh, the dispute process does erase errors. Maybe you should try that dispute again.
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hunnypot1 wrote:
Then they will invite him to sit down with the investigator to "review" all the data submitted. They leave no stone unturned.

That's the key though - even after they comb through your life and dig and dig and dig some more - looking for items of interest (assuming they're looking for both good and bad). They let you sit down with someone and review it. They give you a chance to tell your side of the story.

Much like some say that a lot of lenders will give you a chance to tell your side of the story before completely denying you credit. Your potential future employer is giving you that same chance. Those comapnies that deny employment based solely on your FICO score aren't worth the cost of the paper you submitted your resume on.

They are, IMO, the exact type of company I wouldn't want to work for. One that doesn't foster an environment where individuality and open discussion of ideas (good or bad) are encouraged. They appear to live in a polar society where everything is good or bad and there is no in-between.

-Al
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Insurance companies checking credit rating should ONLY be done if the person requesting insurance requests financing, and should NEVER be used as a determination of premiums. Doing so is nothing more than unethical and immoral! Credit rating has NOTHING to do with anything but CREDIT RATING just as IQ tests measure nothing but one's ability to take IQ tests!

Credit rating being used by potential employers is ONLY valid when the desired position is a financial one. Otherwise, credit rating has NOTHING to do with anything but CREDIT RATING!

I don't understand why so many try to justify the inappropriate and IMHO unethical and immoral use of credit rating for anything but rating credit risk. That is what it is for and NOTHING else!


I assume you've got the research and statistics to prove how useless a credit rating is as an indicator of risk? Or are you just stating an opinion as fact?

Insurance companies in particular are in the business of identifying and measuring risk. If there wasn't a relationship, they wouldn't use it.
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Saying that people with low credit scores or a history of past mismanagment of finances are MORE likely to steal is like saying that people who own guns are more likely to kill.

Both are huge assumptions in my opinion.


Why does everyone make the assumption that insurance companies are making assumptions?

Do you really think these companies are run using guesswork?

Don't you think they've got reams of data supporting this theory?
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Repowoman-

I'm in Boston and it was very hard finding a place to live with bad credit. I had to stay an extra 2 yrs. in an apartment I hated because the market here is so tight.

-bigML
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Actually- I was refering to employers making these assumptions in non-financial positions. In financial positions I would EXPECT a credit rating to effect hiring. There have been too many news stories about bank tellers, CFOs, controllers, etc., etc., etc., who have felt the need to "supplement" their income from customer's pockets in order to support their own means.

Should have made that clear.

I'm sure the insurance companies do research up and down- I doubt they would make policy on a whim...but that's an assumption on my part :-)
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Some people are responsible and still have low FICO scores. For example, a recently graduated lawyer/doctor/professional may have a six figure debt from school loans, with or without CC debt. The debt to income ratio is extremely high and this turns into a low FICO score. I agree everyone is responsible for paying their debts etc, but for some people the system is not egalitarian.
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bstroh,

This is a reply to 3 of your posts, I guess. 66774, 66775, and 66776.

I don't disagree with you in principle. However, there is something I'd like to add.

My husband's credit score is not that good. His high score (at the beginning of the mortgage process.. It is some lower now) was 620, and the median score was 600. Two of the three lenders who pulled his report could not understand why the numbers were so low. EVERYTHING is paid as agreed, never late. It is true that we do have some debt. It is also true that Jeff did not have any credit until he was 25 and therefore the oldest acct is just 2 years old. (This month... Happy birthday to Jeff's credit report.)

Should he be penalized for waiting until he was a responsible adult to apply for credit? (There is an awful lot of complaining on this board about the shark credit card companies going after college kids... At least they get a head start!)

The other thing that bugs me is that because 3 mortgage companies pulled his credit, they show NINE inquiries!!! It seems that no matter which CRA a company looks at, all three report it. Since the mortgage guys look at all 3, each inquiry counts as 3. Nine inqiries in the last month look AWFUL! But again, should Jeff be penalized for 3 times the number of actual inquiries? His median score (after the first 2) went down to the 590's. (I can't remember exactly.) (These are the only inquiries in 6 months.)

So, while I agree that you should pay your bills on time, etc, here I sit with Jeff's credit scores that are probably amoung the lowest on the board. And EVERY SINGLE entry on his report says "PAID AS AGREED, NEVER LATE." And there are 2 cards that also say "Closed by consumer".

I've ranted about this before... It's such Bullsh*t that Jeff's credit score is under 600. He has picture perfect credit. And as I said, 2 of the lenders even commented that they could not understand the low numbers.

Rebecca
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Should he be penalized for waiting until he was a responsible adult to apply for credit? (There is an awful lot of complaining on this board about the shark credit card companies going after college kids... At least they get a head start!)

I don't particularly disagree with your thoughts, either.

But, (there's always but... :)

If his credit file is under 2 years old, that's not a lot of history to go by. I'm sure that plays some type of role in lowering his scores. If you're carrying balances on some of the accounts, depending on the ratio, that can also lower his score.

I think the reason a lot of folks are so up in arms over credit ratings is that they feel it's a commentary on >them< and how they live their lives. It's not. It's a statistical aggregate, predicting how a large group of folks in similar circumstances would tend to behave.

Poor credit doesn't make someone an embezzler. Poor credit doesn't turn someone to a life of insurance fraud. It's just more likely.

The other thing that bugs me is that because 3 mortgage companies pulled his credit, they show NINE inquiries!!! It seems that no matter which CRA a company looks at, all three report it. Since the mortgage guys look at all 3, each inquiry counts as 3. Nine inqiries in the last month look AWFUL! But again, should Jeff be penalized for 3 times the number of actual inquiries?

Actually, there were 9 inquiries. Each of the three companies pulled all three reports, and chose to go with the median score. The fact that you only pulled the trigger on one of the three loans doesn't enter into it. I should note that all mortgage-related inquiries in a particular period are counted as one by the model, but I can't provide a reference to that fact.

Nine inquiries sounds bad; keep in mind, though, it's only 3 per report. Anyone pulling his file will see 3 inquiries, not 9. Plus, they'll roll off soon enough, and start losing significance even before that.
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"Guess who pays for government? The folks who aren't in over their heads..."

bstroh,

I happen to think you're way off on that one. I think most of us pay for gov't, regardless of our credit rating, in the form of taxes.

-bigML
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Uh, the dispute process does erase errors. Maybe you should try that dispute again.

It does not always erase errors. It gives you an opportunity to dispute them and sometimes they're errased. More often than not they're not. I don't have statistics to show you but I'm friends with a credit attorney who makes a living out of suing debt collection agencies and has taken on the "big three" when they fail to comply with the law. He tells me that it's very difficult to get things removed even when the issue can be proven as fact. I had to hire this friend to help erase mistakes that cc reporting companies have made. One of which was an error in reporting my address, an address in which I never lived at yet it remained on the credit report. Two of the three removed it months ago. I pulled the report again and one of the big three still has it on there even though procedure was followed. That dropped my score 30 pts. Another error was with a particular bank for an auto loan. One of the "big three" marked me late while the other two did not. I disputed this with the company through the same attorney and it's still on there. So without any kind of due process, hearing or trial the mark remains even though we proved that it wasn't the case. What's needed is a proceeding with an impartial judge deciding on who's right and who's wrong based on the facts.

What's wrong with this scenerio. A trial procedure like the one I've proposed would cost taxpaying individuals and companies millions if not billions in legal costs. What are the alternatives for people who do pay on time and live by the law yet still find errors?

Uh, The dispute process in not a trial or hearing of the facts. It's a paperwork procedure that more often than not doesn't work.

Uh, bstroh... Lighten up friend.

Take Care,

PSC
cesteacher
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bstroh

But, I doubt we're going to agree any time soon.

You're probably right but the debate is fun and sporting.

Take Care,

PSC
cesteacher
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<<Warning! Loud and angry opinion follows. Read at your own risk!

Insurance companies checking credit rating should ONLY be done if the person requesting insurance requests financing, and should NEVER be used as a determination of premiums. Doing so is nothing more than unethical and immoral! Credit rating has NOTHING to do with anything but CREDIT RATING just as IQ tests measure nothing but one's ability to take IQ tests!
>>


Bull yourself.


I used to work for a utility company. Two consecutive field collectors who collected money from customers were fired after they collected money paid by customers on bills, wrote them out a receipt and then pocketed the money. This is especially stupid since only a moron wouldn't recognize that the account was going to be re billed showing the unpaid balance and the customer was going to call in to complain that their payment wasn't credited.

Both people were in a lot of credit problems. No doubt they had more after being fire for this kind of embezzling.

My experience is that desperate people can often times justify any kind of behavior that will solve their immediate problem. While I'm not religious, the Lord's Prayer says "Lead me not in to temptation, but deliver me from evil..." Taking steps to avoid putting people in situations that may tax their honesty is doing yourself, and them, a favor.


Finally, the basis of the employment relationship is "employment at will." If you authorize employers to check your credit, they are entitled to do so and use the results. If you don't want to give them permission, you are welcome to maintain your privacy ---but you may not get the job.


Seattle Pioneer
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I'm a sentimental schmuck when it comes to making decisions on who I will rent my properties to, and I've been burned over and over as a result. There are lots of
very good liars out there, and I'm lousy at separating the tenant wheat from the tenant chaff.

After evicting one tenant, I had to take more than 13,000 pounds of junk they left behind to the dump.


Hey, I don't blame you! I'd certainly run a check if I was renting to someone! I guess what I'm advocating for is a little flexibility. Such as, if the person has a blemish or two on their report, giving them a chance to explain it or maybe agree to an additional deposit, rather than rejecting them outright.

I'm just glad some people will rent w/o a credit check, because otherwise my DH and I would be homeless! (It's already bad enough that we have pets and one of us is a future lawyer!)
rw
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I assume you've got the research and statistics to prove how useless a credit rating is as an indicator of risk? Or are you just stating an opinion as fact?

Insurance companies in particular are in the business of identifying and measuring risk. If there wasn't a relationship, they wouldn't use it.


1) I am not stating opinion as fact, I am stating opinion as opinion as labeled at the top of my rant.

2) If insurance companies are so good at identifying and measuring risk, then perhaps you can explain this. Standard insurance company actuarial tables indicate that someone of my sex, age, height, and frame should have a maximum weight of X, yet 3 separate and distinct physical analyses of my body indicate that in order to reach that number I would have to get to 0% body fat AND amputate one of my limbs. Using actuarial tables of height and weight to determine MY health risk are just as (in)accurate as using my FICO score to determine MY propensity to steal. In other words, IMHO, USELESS!

Thanks for your attention.

Jeff
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In defense of myself and my own character since it seems I'm being judged by some. (Should have stayed lurking)

Can't speak for everyone here, but I know lots of us don't judge you for your-lower-than-you'd-like FICO! Credit messes happen to the best of us. I've been in some bad financial scrapes (both mistakes and bad luck) and consider it sort of a miracle that I've managed to keep a good rating.

My husband had bad credit...I knew it and married him anyway. ;-) Now we are working together to get *both* of us out of big CC debt. And mine is alot worse than his, despite (or because of?) my better credit rating.
-rw
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Saying that people with low credit scores or a history of past mismanagment of finances are MORE likely to steal is like saying that people who own guns are more
likely to kill.

Both are huge assumptions in my opinion.


I would not be at all surprised if, statistically, as a group, people who own guns are more likely to kill. But that doesn't means Defendant Joe Schmoe is guilty of murder because he owns a gun.

In criminal trials, deductive reasoning is used. In hiring, lending, and insuring, inductive reasoning is used. It may not be fair to the individual being evaluated. That's why some of the most socially destructive types of generalizations (e.g. about people of a certain age, gender, ethnicity, religion, sexual orientation) are prohibited.

So far it is "ok" to refuse to rent to someone because they are a law student, refuse to hire them because they have bad credit, or refuse to provide medical insurance because they are already sick (pre-existing condition).

This thread is getting more and more OT, but it's interesting anyway, and not totally unrelated to the board topic.
rw
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Dear Seattle Pioneer,

I have read and enjoyed many, many of your posts, I don't always agree with you, but I certainly respect you and your opinions.

That said, and from a strictly personal point of view, if anyone makes any assumption about me based on my height, weight, sex, color, religious beliefs, FICO score, marital status, gender preference, ethnic background, hobbies, occupation, membership in the Fool, or anything else, then the odds are good to excellent that they are flat out WRONG! I find the practice of making assumptions about someone based on those sorts of data points akin to prejudice, at least, in my own very personal case.

I particularly find it offensive when already impersonal organizations, such as insurance companies, make assumptions about me based on these things. I think that the lack of recourse provided aggravates these types of situations.

Here are some things that I think should be remembered...
A low FICO score does not guarantee bad character.
A low FICO score does not mean financial difficulty.
A high FICO score does not guarantee good character.
A high FICO score does not mean that a person is NOT having financial difficulty.

Regards,
Jeff (falling outside all sorts of curves since 1902...)

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If the FBI thinks I'm worthy enough to work on or near helicopters than I think I can work for a software company as a trainer.

So you're angry that this software company has higher standards than they government?

Sorry... only intended as comic relief.

xtn
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Some people are responsible and still have low FICO scores. For example, a recently graduated lawyer/doctor/professional may have a six figure debt from school loans, with or without CC debt. The debt to income ratio is extremely high and this turns into a low FICO score. I agree everyone is responsible for paying their debts etc, but for some people the system is not egalitarian.

And well it should not be. Irresponsibility is only one reason to avoid lending to a person. A high debt/income ratio is another. No matter how responsible someone is, there must be a higher risk of defaulting during an unforseen streak of bad luck if you owe a lot of money already.

xtn
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No one is asking for Govt to pay for it. What he is asking is more of an oppty to fix it while using his skills he has acquired. I dont disagree witha credit check I do disagree with discrimination because of a credit check. Poor Credit No Job is like saying because you are of a certain ethnic race you will act this way.

Selovell
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My husband's credit score is not that good. His high score (at the beginning of the mortgage process.. It is some lower now) was 620, and the median score was 600. Two of the three lenders who pulled his report could not understand why the numbers were so low. EVERYTHING is paid as agreed, never late. It is true that we do have some debt. It is also true that Jeff did not have any credit until he was 25 and therefore the oldest acct is just 2 years old. (This month... Happy birthday to Jeff's credit report.)

Should he be penalized for waiting until he was a responsible adult to apply for credit? (There is an awful lot of complaining on this board about the shark credit card companies going after college kids... At least they get a head start!)


It isn't a penalty to go without credit. It is a priveledge to get credit.

xtn
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I agree Al!!

Slovll
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A low FICO score does not guarantee bad character.


You are absolutly correct. What you fail to account for is that it suggests the posibility. If an employer looks at two equally qualified applicants and one has a lower score, it is a better bet (and you're right, thats all it is is a bet, but still a better one) to go with the higher scoring applicant.

xtn
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xtn wrote:
It isn't a penalty to go without credit. It is a priveledge to get credit.

On that point, I must disagree to a certain extent.

Isn't it true that going without credit will net you a low score - just as having and abusing credit would? That in itself would make it a penalty to not only have/abuse credit but to go without it.

How many of us have either heard IRL or read on this board that somenoe was denied credit because of a lack of credit history? I'll dig for the posts if you like, but I doubt it's necessary.

You -are- right though in that it's a priveledge to get credit. By that same token, it's a priveledge for the creditors to gain you as a customer for without us as consumers, the creditors would cease to exist (interesting though that is).

-Al

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Warning! Loud and angry opinion follows. Read at your own risk!


Insurance companies checking credit rating should ONLY be done if the person requesting insurance requests financing, and should NEVER be used as a determination of premiums. Doing so is nothing more than unethical and immoral! Credit rating has NOTHING to do with anything but CREDIT RATING just as IQ tests measure nothing but one's ability to take IQ tests!

Credit rating being used by potential employers is ONLY valid when the desired position is a financial one. Otherwise, credit rating has NOTHING to do with anything but CREDIT RATING!

I don't understand why so many try to justify the inappropriate and IMHO unethical and immoral use of credit rating for anything but rating credit risk. That is what it is for and NOTHING else!

Sorry, but this makes me HOT!

No disrespect intended,
Jeff


Jeff,

Slow down and take a deep breath--it's going to be OK.

I know that many people feel that credit rating shouldn't have anything to do with anything except granting credit, but the fact is there are thousands of actuaries and statisticians and other people with a lot of time on their hands who have done many, many studies proving that there are correlations between such things as low credit scores and increased risk-taking. They are the same guys who figured out that married people are better risks for insurance that singles, and that under-25 people are worse risks that over-25 people. It's a statistics game, and while it is unfortunate that individuals sometimes seem to get the shaft because of what a demographic as a whole does, i don't see it changing. I don't see many people getting upset when they turn 25 and their insurance rates go DOWN because of what these statisticians have found, so why be mad when you have a lousy credit score and you rates go up, or you have to pay a bigger deposit on your apartment, or you lose a job?

I would encourage anyone who has a problem with their credit score being used for insurance, employment, and other purposes to avoid companies and potential employers which use it as a screening tool. Personally, I prefer to live as healthy a financial life as possible and hope that my scores stand up, because i work in an industry where they ALWAYS check your credit score for jobs.

d

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<<That said, and from a strictly personal point of view, if anyone makes any assumption about me based on my height, weight, sex, color, religious beliefs, FICO score, marital status, gender preference, ethnic background, hobbies, occupation, membership in the Fool, or anything else, then the odds are good to excellent that they are flat out WRONG! I find the practice of making assumptions about someone based on those sorts of data points akin to prejudice, at least, in my own very personal case.
>>


Suppose you had a job open that involved handling a lot of cash transactions that might be poorly monitored.


You have two applicants who have equal skills. One, however, is deeply in debt with collection agencies and court judgements pending against them. The other owns their own home, has retirement accounts, a car nearly paid for a money in the bank.


Which would you hire?



Seattle Pioneer
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"Suppose you had a job open that involved handling a lot of cash transactions that might be poorly monitored.


You have two applicants who have equal skills. One, however, is deeply in debt with collection agencies and court judgements pending against them. The other
owns their own home, has retirement accounts, a car nearly paid for a money in the bank.


Which would you hire?"

Seattle Pioneer-

While I think your point has definite merit, in the real world I think potential employer's would be far better off looking a little deeper (I use the term real world because one rarely gets two candidates with exactly the same credentials). The fact that I almost didn't get a job (I am a portfolio mgr in charge of about $230 million) because of mistakes made 4 years ago is kind of ridiculous. I think that a responsible employer would look into the issue a little further and take a broader look at potential employees before rejcting someone.


-bigML
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It has been my "PRIVILEGE" to read all these fine responses.

wdg :>
spelling sheriff
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In defense of myself and my own character since it seems I'm being judged by some. (Should have stayed lurking)

Stand tall and be proud of your post.

You have stimulated the best conversation of the day.

Don't be a whimpy lurker if you have something important to say. Although some people's judgement is a little harsh or self-serving, it's alway important to be able to listen objectively to what others have to say.

I personally disagree with you and believe companies should attempt to select employees with the highest-possible character. It can save them a lot of problems down the road. On the other hand, financial situations do arise and it would be nice if they asked for clarification.

Bret
Free to Disagree


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That's the key though - even after they comb through your life and dig and dig and dig some more - looking for items of interest (assuming they're looking for both good and bad). They let you sit down with someone and review it. They give you a chance to tell your side of the story.>>>


Yes, the investigator does give you the opportunity to explain any problems (assuming they have not already disqualified you for some of the information). However, one of the main reasons for this "interview" is they are trying to see how you respond to questions and to ascertain if you are being honest and upfront about everything. Sort of a lie detecter test. They ask you questions about things they have already investigated and see if you answer correctly.
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I have a problem with that too. It seems, well, wrong. I guess the idea is that you are more likely to steal from the company because you're more desperate for money(?) I know that it's also harder to get renter's insurance with poor credit, and I guess it's the same thinking.
You're more likely to file a false claim because you're more desperate for money(?)


On condition of anonymity, a hiring manager acquaintance of mine told me that the reason they might pass over somebody with bad credit for a job is less about the likelihood that they would steal from the company (bad credit does not equal thief), and more because they make high-maintenance employees. Apparently what at least his company is more concerned about is that you're going to end up having your paycheck attached by a creditor, get sued and have to leave work for a week or two to defend yourself in court, or lose your housing and/or transportation and be unable to even get to work.

I don't like it, but then again, I also don't like having my social security number printed on every single piece of paper my employer and/or medical insurance sends me.

Tamarian
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How many of us have either heard IRL or read on this board that somenoe was denied credit because of a lack of credit history? I'll dig for the posts if you like, but I doubt it's necessary.


You are correct of course. I only wanted to point out that we are born with no credit. Getting a loan or a credit card is a priveledge. It isn't a penalty to be denied. This point of view I have is based off of the fact that our baseline is not having a loan or a credit card.

xtn
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If his credit file is under 2 years old, that's not a lot of history to go by. I'm sure that plays some type of role in lowering his scores. If you're carrying balances on some of the accounts, depending on the ratio, that can also lower his score.

Agreed. However, it is still a very frustrating place to be, trying to buy a house, etc, and the numbers barely make it. At the same time, we've never paid anything late. Our mortgage is going to be something like $240 less than our rent, and our lender said that this will play a factor in getting the mortgage. At the same time it is frustrating that these things don't affect the credit score as quickly as the inquiries do. (The inquiries took points off within days... How long does it take to get points added?)

Nine inquiries sounds bad; keep in mind, though, it's only 3 per report. Anyone pulling his file will see 3 inquiries, not 9. Plus, they'll roll off soon enough, and start losing significance even before that.

Actually, they'll be there for 2 years... And they'll affect his credit score for at least 6 months.

I just really hope that a year from now that number will look much better. (Another year of history with a mortgage *should* matter to them.)

Rebecca
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I cannot imagine why a computer-based curriculum designer needs a great credit score to do the job well, but maybe that's just me. Sounds like an employer I would not want to work for if my credit score were that important to them. I could see it if I were in charge of their money, but not for writing class materials.
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I've heard someone saying they do that to avoid situations when someone gets a big debt and as a result collectors/companies are trying to get to the company to get some money from the paycheck. Don't know how true this is...
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<<While I think your point has definite merit, in the real world I think potential employer's would be far better off looking a little deeper (I use the term real world because one rarely gets two candidates with exactly the same credentials). The fact that I almost didn't get a job (I am a portfolio mgr in charge of about $230 million) because of mistakes made 4 years ago is kind of ridiculous. I think that a responsible employer would look into the issue a little further and take a broader look at potential employees before rejcting someone.
>>


They probably do.

Nevertheless, the idea of expecting someone to have mastered the modest art of managing their personal finances as a condition of putting them in charge of $230 million of other people's money does not strike me as unreasonable.



Seattle Pioneer
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bigML
I think that a responsible employer would look into the issue a little further and take a broader look at potential employees before rejcting someone.

If the employer has a doubt, why take a chance; afterall it is his/her business.

Walter
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If insurance companies are so good at identifying and measuring risk, then perhaps you can explain this. Standard insurance company actuarial tables indicate that someone of my sex, age, height, and frame should have a maximum weight of X, yet 3 separate and distinct physical analyses of my body indicate that in order to reach that number I would have to get to 0% body fat AND amputate one of my limbs. Using actuarial tables of height and weight to determine MY health risk are just as (in)accurate as using my FICO score to determine MY propensity to steal. In other words, IMHO, USELESS!

Insurance companies use actuaries to identify statistical trends among large populations. These actuaries them create tables identifying low risk and high risk characteristics. Health actuaries have identified smoking as a high risk characteristic. Property and casualty actuaries have identified 16 year olds as a high risk group in auto insurance. These tables are by definition broad and general.

In order to get a lower rate, you would have to pick up the tab for an insurance company doctor to come out and give you a complete physical. Perhaps also, an underwriter could come stay with you for a few days to get an idea of your eating and exercise habits, your overall stress level, and your likelihood to engage in fraud against the insurance company. Most people wouldn't agree to submit to, or pay for, this level of examination, so the insurance companies have to use questionnaires, actuarial tables, and FICO scores.
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It isn't a penalty to go without credit. It is a priveledge to get credit.
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I didn't say it was a penalty to go without credit, and I agree that credit is a priveledge. The point is that he CHOSE not to have credit until he was 25 and so now at 27 instead of having nearly 10 years of credit history, he has 2... And his credit score is lower because of that.

Shouldn't the fact that he was RESPONSIBLE enough not to apply for credit until he was in a position and frame of mind to handle it count for anything??? I'll bet his little sister has a higher number. She's 21 with 3 years of history. And since their mom pays all her bills (credit card, college, beer, etc.) I imagine everything has been paid on time.

Do you see why this bugs me?

Rebecca
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<<I didn't say it was a penalty to go without credit, and I agree that credit is a priveledge. The point is that he CHOSE not to have credit until he was 25 and so now at 27 instead of having nearly 10 years of credit history, he has 2... And his credit score is lower because of that.

Shouldn't the fact that he was RESPONSIBLE enough not to apply for credit until he was in a position and frame of mind to handle it count for anything??? I'll bet his little sister has a higher number. She's 21 with 3 years of history. And since their mom pays all her bills (credit card, college, beer, etc.) I imagine everything has been paid on time.

Do you see why this bugs me?
>>


You are responsible for the decisions you make.

If your friend decided to avoid credit because he wasn't satisfied he could handle it, fine. That decision saved him from having a lousy credit record --- instead he has a good, but limited credit history. He gets exactly what he deserves.


His sister perhaps was no more responsible, but chose to allow her mother manage her finances. She, also, gets exactly what she deserves. If she takes over her finances herself without having developed the skills, she might make tyrouble for herself.

But I read posts every day on this board by people who would be a lot better off than they are had they chosen to do without credit for a few years as your friend did.

Your friend's reward for avoiding credit is not having the credit load and bad credit history he might have had had he used credit at an earlier age before he was wise enough to use it wisely.


Seattle Pioneer
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"Nevertheless, the idea of expecting someone to have mastered the modest art of managing their personal finances as a condition of putting them in charge of $230 million of other people's money does not strike me as unreasonable."

Seattle Pioneer-

Of course you are correct and I fully expected to have it checked. My point is my scores were still low, mainly because of a mistake I made 4 years prior and my high balances which were due to the fact I was making a crappy salary (this is relatively speaking). Although I had been paying on time for years after, my score was still damaged. I don't think that should be the main criteria for them rejecting me.

-bigML
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"If the employer has a doubt, why take a chance; afterall it is his/her business."

It is their business and they do have the right, but I think they'd be best served looking at more than a credit score. In my case (we're getting into particulars here and a little off of the path), I came highly recommended and the only questionable issue was my credit report. I had excellent references at my previous co. and at the company I was applying to, no criminal record (not even a moving violation or an unpaid parking ticket) and I had a skill set that was highly desireable in a tight market. I also don't think I was a high risk for theft because I was already handling money. I feel that after going throught the whole process and being rejected on a credit score is kind of ridiculous. Maybe if someone had recent judgements or was currently deliquent I could see a case for rejection, but if the transgretions are a year or more old I think you need to look at what a person is doing now.

-bigML
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bigML,

Not one to keep my nose out of it.... you said, "my high balances which were due to the fact I was making a crappy salary"

Yes, it is very easy to get into debt when you are poor. I've been poor. For a time my husband and I lived on what he was making at McDonalds as a cook. We went into credit card debt then. However, I had friends who had even less money then we did who didn't get into credit card debt. No matter how much you make, it is easy to live above your means. Living below your means takes hard work and disapline.

Case in point. In the recent past, my husband and I were both working. We lived like we had only one income and we worked hard to pay off the debt. When I was accepted into graduate school, we made a goal to continue to pay down on the debt (this ment even more belt tightening). Now, we had two nice windfalls. We could have paid off the debt and increased our standard of living. We could have moved to a larger appartment, eaten out more, gone to movies, and the rest. Insted, we continued to live like we didn't have the money, we paid off the debt and invested our debt payments.

If I were hiring someone, would I want to hire someone who was poor who said they had a bad credit rating because they were poor, or would I want to hire someone who was poor who had a great credit rating and didn't have to make excuses? I would hire the person who had demonstrated diapline.

My only concern with using credit ratings is that it might unfairly penalize families who have a member with a medical problem. That is something no amout of disapline can prevent.
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NylaB,

(As I said before we are getting off of the main topic and more into my personal situation, but I don't mind, were all friends here)

All your points are well taken. My high balances were due mainly to the fact that I was under employed for a while, OVERSPENT (the main culprit), and live in one of the most expensive places in the US (Boston, MA) and to top it off my mother got sick unexpectedly. Again, I can't emphasize enough the the problems were 4 years old when I applied for my current job. My CURRENT spending habits were still being affected by my PAST spending habits. As an employer, would you pass on a top candidate (and I was, by far, the top candidate) because of mistakes made 4 years ago that caused him to have a low credit score? I just don't think it would be wise.

Just going back to what I said a few posts ago, a wise employer would look a little more deeply into the subject. A poor FICO score can and should be a red flag, but not the primary cause of someone's rejection.


-bigML
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I wish I had the sense and knowledge I have learned the hard way to do some real investigation on the guy who is buying a property off me. Now I am stuck with him, he owes everybody, is a thief and a tax cheat and has a foreclosure action on his record which adds all kinds of a new low FICO for him.

Hey, maybe he has a lower FICO than I do!

Ishtar
(ever searching. . .)

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Why can't the 'public backlash' be something like "People will become more responsible with their money and credit" ??


couldn't agree more bstroh, and the last thing any of us needs is more government involvement, but the fact is that the FICO score is somewhat arbitrary (maybe flawed is a better word in this context) ...as indicated by many of the posts on this string, and therefore like all like all broad-based judging criteria...it will very likely eventually be (and should) more carefully regulated.

mick7
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