In light of us pouring billions of dollars into the banks, so they can keep buying corporate jets and eventually ask for another bailout when they can’t collect on their moronic loans that they have written, I would like to take a look at the utterly stupid and hypocritical nonsense known as credit scoring.
I am not going to try to explain all the mumbo jumbo complexity of credit scores, but the hypocrisy part of this story is pretty simple. In theory the credit scoring system is supposed to keep banks from lending money to folks who can not pay it back. It supposed to be a measure of how credit worthy a person is. Instead, banks use it to charge a higher interest rate to folks who have had credit mishaps. In other words, the banks have said, “if you have financial problems, sure we’ll lend you the money, but we’ll charge you higher interest, and variable rates, that will actually make it more likely that you can not pay it back. Look at me. My name is jackass banker.”
A bank should have every right to decide HOW MUCH money they want to lend you, but why should they be able to penalize folks with higher interests rates? This is exactly the kind of process that has led to all these foreclosures. Am I right or am I right?
How about while we are bailing these jerks out, we reform this whole bogus system so that everyone gets a fair shot at a decent loan that they can afford to pay back?